SOCIAL
Meta plans new layoffs, likely to match 13% job cut tally from last year: Report
Meta is planning additional job cuts over several rounds in the next few months, people familiar with the matter told The Wall Street Journal.
As per the report, this additional cuts would be roughly of the same magnitude as the 11,000 or 13 percent workforce layoffs last year. It further stated that cuts are expected to be announced next week and non-engineering roles are likely to be hard hit. Some projects and teams are also expected to be shot down.
Last year, Facebook parent Meta had said that it will let go of 13 percent of its workforce, or more than 11,000 employees, as part of a plan to reduce costs at the social-media platform following disappointing earnings, soaring costs, and a weak advertising market.
The news of layoffs has been going rounds since a month. Earlier in February, it was reported that the company was planning to let go thousands of workers. Washington Post had reported that the company was planning to push some leaders into lower-level roles without direct reports – essentially flattening the layers of management between top boss Mark Zuckerberg and the company’s interns. On 7 March, people familiar with the matter had told Bloomberg that the company is planning to cut thousands more jobs as soon as this week in its fresh round of layoffs.
Also Read: From IT to Startups, these Indian companies laid off employees in 2023
As per the latest WSJ report, the reductions this year are expected to reach the same proportion of those who remain, the people said, though the final count of the cumulative cuts expected over the second quarter isn’t yet clear.
Among projects that will be cut are some wearable devices that were in the works at Reality Labs, Meta’s hardware and metaverse division, the people said, suggesting a near-term retreat from efforts to popularize virtual and augmented reality products even as longer-term research efforts continue, reported WSJ.
Meta shares rose by more than 2 per cent in after-hours trading after The Wall Street Journal reported the planned cuts.
Also Read: Which Indian IT firms are hiring amid layoffs?
“We’re continuing to look across the company, across both Family of Apps and Reality Labs, and really evaluate are we deploying our resources toward the highest leverage opportunities,” Meta Chief Financial Officer Susan Li said Thursday at the Morgan Stanley 2023 Technology, Media & Telecom Conference.
Meta Chief Executive Mark Zuckerberg previously said that 2023 would be a “year of efficiency” at Meta and that some projects would likely shut down at the company.
The continuing cuts are notable given Zuckerberg’s prediction in October that the company would end 2023 with roughly as many employees as it had at that time.
The company sought to encourage further attrition through the performance review process, reported WSJ.
Technology companies including Amazon.com Inc., Microsoft Corp. and others have cut thousands of jobs this year and last as profits retreat from pandemic-induced highs. Since 2022, layoff tallies have reached nearly 300,000 workers, according to Layoffs.fyi, a site that is tracking job cuts in the industry.
(With inputs from ANI)
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SOCIAL
US judge halts pending TikTok ban in Montana
TikTok use has continued to grow apace despite a growing number of countries banning the app from government devices. — © POOL/AFP Liam McBurney
A federal judge on Thursday temporarily blocked a ban on TikTok set to come into effect next year in Montana, saying the popular video sharing app was likely to win its pending legal challenge.
US District Court Judge Donald Molloy placed the injunction on the ban until the case, originally filed by TikTok in May, has been ruled on its merits.
Molloy deemed it likely TikTok and its users will win, since it appeared the Montana law not only violates free speech rights but runs counter to the fact that foreign policy matters are the exclusive domain of the federal government.
“The current record leaves little doubt that Montana’s legislature and attorney general were more interested in targeting China’s ostensible role in TikTok than they with protecting Montana consumers,” Molloy said in the ruling.
The app is owned by Chinese firm ByteDance and has been accused by a wide swathe of US politicians of being under Beijing’s tutelage, something the company furiously denies.
Montana’s law says the TikTok ban will become void if the app is acquired by a company incorporated in a country not designated by the United States as a foreign adversary.
TikTok had argued that the unprecedented ban violates constitutionally protected right to free speech.
The prohibition signed into law by Republican Governor Greg Gianforte is seen as a legal test for a national ban of the Chinese-owned platform, something lawmakers in Washington are increasingly calling for.
Montana’s ban would be the first to come into effect in the United States – Copyright AFP Kirill KUDRYAVTSEV
The ban would make it a violation each time “a user accesses TikTok, is offered the ability to access TikTok, or is offered the ability to download TikTok.”
Each violation is punishable by a $10,000 fine every day it takes place.
Under the law, Apple and Google will have to remove TikTok from their app stores.
State political leaders have “trampled on the free speech of hundreds of thousands of Montanans who use the app to express themselves, gather information, and run their small business in the name of anti-Chinese sentiment,” ACLU Montana policy director Keegan Medrano said after the bill was signed.
The law is yet another skirmish in duels between TikTok and many western governments, with the app already banned on government devices in the United States, Canada and several countries in Europe.
SOCIAL
49 Times Companies Gave The Most Ridiculous Explanations For Their Mistakes
Facing the truth and being responsible for your actions, no matter how unpleasant, is the mature thing to do. But that’s easier said than done. Especially when talk turns to business! Many companies and managers have a hard time being honest about what’s going on because they have a vested interest in staying profitable.
The r/AskReddit online community had a field day, calling out various companies that gave thoroughly ridiculous explanations for why something was happening. It’s perfect proof of why corporate communication has to be empathetic, not just robotic attempts to spin the truth. Scroll down to see just how ludicrously some businesses tried to protect their interests.
We wanted to learn about proper business communication, so we reached out to Matt Johnson, Ph.D., a marketing psychology speaker and the host of the human nature blog. He explained why transparency is paramount and shed some light on one of the best campaigns ever, aimed at repairing a company’s tattered reputation. You’ll find Bored Panda’s interview with the expert below.
“We reduce the performance of your older iPhone to keep it from crashing.” Sorry, Android doesn’t do this and this type of thing hasn’t been a problem for over 10 years. It WAS an issue with some of the earliest smartphones, but not since 2012 or so. Apple just does it to try to get you to upgrade or pay for a battery replacement.
Edit: gotta love the Apple sheep down voting me for speaking the truth.
According to marketing psychology speaker Johnson, how a company approaches communication about problems will depend on the business itself, as well as how serious the issue is.
“If it’s a safety issue with the product, there are regulatory and liability concerns, and so almost certainly in these cases the company needs to come clean, do a recall, and formally apologize,” he explained to Bored Panda via email.
“In less severe cases, when the product is merely faulty and not dangerous, it’s still a best practice to take responsibility and apologize. The brand’s reputation is contingent on the quality of their products, and if they are consistently delivering a poor experience, this won’t be sustainable for the brand in the long term,” Johnson said.
Samsung destroyed my fridge while working on it. They agreed to replace it, and then told me they couldn’t replace my fridge they destroyed, because “they didn’t have any.”
They’re literally the manufacturer.
I filed a claims in small claims court and won and made them pay. It was ridiculously easy.
McDonald’s and the coffee burn victim, claiming she only did it for the money. She didn’t – she was horribly burned by coffee kept far too hot that McD’s had been warned about repeatedly in the past and they still refused to fix.
“It will force the company into a position where it is competing based purely on price and on the advertising effectiveness, which is typically a losing proposition. All in all, the default should be to take ownership, repair the product, and to be transparent to the consumer.”
Luckily for brands, consumers tend to be “surprisingly forgiving” when they’re transparent about their failures. “Three things should be in place in order to pull this off,” Johnson walked us through the process.
“First, the brand needs to have some degree of existing trust with their consumers. Secondly, the brand needs to be transparent and take ownership of its product’s failings. And lastly, they need to make the product genuinely better. When these three things are in place, consumers can be very forgiving which helps to restore the company’s reputation.”
Optus recently blamed a outage that affected the whole of Australia on a 3rd party. This “third” party was their parent company
According to the marketing psychology speaker, one of the best examples of this was done by Domino’s Pizza, over a decade ago. It’s a prime example of how honesty, when mixed with grit and creativity, can yield great results.
“In 2011, Domino’s Pizza did the unthinkable: They came out and said that they’re pizza is terrible. They listened to consumer complaints, ran focus groups, and all the signs pointed to the same conclusions. And Domino’s said: you know what, you’re right,” Johnson shared with Bored Panda.
“They ran a campaign admitting that their pizza isn’t what it should be, that they’d be making changes, and that in the future, their pizza would be better. And they did. Fast forward thirteen years later, and Domino’s is a beloved brand, who’s pizza is adored by their customers. They leveraged their trust with their consumers, admitted fault, and made the right changes. And in the end, their business greatly improved.”
You can find more of Johnson’s insights and posts on his marketing and human nature blogs.
Amys Baking Company after going nuts on facebook. They claimed they were hacked and were now working with the FBI to find out who was behind it
Reputation is everything in the business world. If your customers know that they can trust you, they’ll stay loyal. Trust, however, is a pretty ephemeral thing. A lot of different factors contribute to it. For instance, you need to think about the quality of your product and services, how your employees treat your customers, as well as how ethically you do business.
To put it bluntly, putting products and services aside for a moment, customers value companies that have clear values, act in a moral way, and are transparent about what they do. Businesses are like people: those who are trustworthy and respectable become true leaders. Meanwhile, shady behavior and avoiding responsibility will get called out. Consumers and employees alike hate it when someone’s trying to pull the wool over their eyes.
When a company runs into trouble, the first instinct is (quite naturally) to focus on survival. If something unethical happens, many businesses try to avoid the issue and present a counter-narrative. Their goal is to protect their reputation and profits.
Many companies are notorious for calling their customers stupid when they’re sued for something. For example, when Subway was sued for undersized sandwiches, Subway argued that “Footlong” was just a trademark and there was no reason for anyone to think that it meant that the sandwich was 12 inches long.
However, this can backfire to a pretty big extent. If someone knows what really happened, they can blow the whistle and spill the beans for the whole world to know. When you get caught lying, it’s even worse.
In an ideal world, every business, boss, and middle manager would be open, honest, and transparent about any and all issues, both with their employees, as well as their customers. However, in reality, companies are constantly competing for people’s money and attention. So showing any signs of weakness, when your opponents probably won’t do the same, would be ludicrous.
It all comes down to the fundamental values upon which a company is built. Founders and managers who fully embrace transparency and empathy are going to tackle any issues that arise very differently than someone who always puts profit first… at any moral cost. Just to be clear, there’s nothing wrong with being profitable. But it has to be balanced with ethics, a sense of purpose, and proper motivation for workers.
Pier 1 was blaming their employees for not upselling/getting enough credit cards before they went bankrupt.
I could buy the same blanket at home goods cheaper than my discount at Pier 1!
Obviously, employees want to get a fair wage, have plenty of room for growth, and only ever deal with supportive bosses. That won’t always be the case. It becomes necessary to screen businesses for their work culture ahead of time before you’re in too deep. So before you think of applying for a position at some huge conglomerate, do some research. Read up on what their workplace culture is like, see if they’ve ever been embroiled in some deeply troubling scandals.
Forbes suggests checking whether a company’s online presence is “professional and legitimate.” That means looking at their website, how they respond to customer inquiries and criticism on social media, and what (former) employees have to say on job sites like Glassdoor and LinkedIn. It’s definitely a red flag if you spot examples of awful customer service.
If a business has tons of negative reviews online, something is probably amiss. However, just like you shouldn’t blindly trust any corpo PR dribble, you should take any reviews with a few grains of salt. Actually, scrap that, pass the whole salt shaker!
“we need everyone back in the office buildings now because the 3 years of working from home didn’t actually succeed and everyone has to be back in the office for the work to get done. It has nothing to do with needing all the workers to resume spending their money on all the stuff they didn’t have to for 3 years.”
I quit a job after the entire company was being forced to sign away our rights to ever sue the company. (This was after they were getting sued for not paying their employees accurately).
The topper was that if we elected not to sign, we would be forfeiting ALL BONUSES until we did sign.
I quit within a couple weeks and told my boss directly that a leading factor in why I was leaving.
He left shortly after too.
Comcast changed its name to xfinity because Comcast was well regarded as the worst customer service on the planet and you couldn’t search their name without it pulling up page after page of customer stories about how bad they were.
They didn’t fix their customer service they just changed the name of the company as if it would reset their reputation and it on some level worked.
It’s vital to filter which reviews give an accurate representation of reality and which ones are written by someone who is extremely disgruntled about e.g. being fired (perhaps for poor performance or other issues). A good rule of thumb is that the more emotional a review is, the more biased it is. The truth isn’t black and white, it’s often nuanced. Sure, any company might make some mistakes. But it doesn’t mean that these businesses fail in every single regard.
You won’t ever find a ‘perfect’ company, but you can come across businesses that admit to having made mistakes and then work to correct them. If you ever have any doubts, as a prospective worker or a potential customer, get in touch with the business and ask some questions about their culture and values.
SpaceX offered to build a submarine to rescue people in a cave. They drew a design and everything. Had a whole plan. A guy said no thanks so Elon Musk called him a child molester.
I used to drive for Schneider National Carriers. My husband and I hit from behind by another semi. Schneider deflected it back to us saying that if we wouldn’t have stopped for a shower 10 hours previously we would not have been there to get hit in I -40
Tucker Carlson being sued as part of Fox News and his lawyers stating that what he says “cannot reasonably be interpreted as facts.”
Tesla’s Full Self Driving is *always* only waiting on regulators to approve it.
Really it’s s**t software that doesn’t work.
[Air Canada 624 landing in Halifax](https://en.wikipedia.org/wiki/Air_Canada_Flight_624). For a while their press releases stated that it was a “hard landing”. The fact that 24 people were injured, engines separated from the wings, and the plane was written off didn’t seem to figure into it.
April 20, 2010 [the Big Horizon Oil Spill](https://en.m.wikipedia.org/wiki/Deepwater_Horizon_oil_spill)
An estimated 4.9 MMbbl (210,000,000 US gal; 780,000 m3) of deep water oil spilled into the Gulf of Mexico. It’s considered the largest marine oil spill in petroleum history.
On May 4, of the same year, they were awarded the [Safety Prize](https://abcnews.go.com/amp/Blotter/louisiana-oil-spill-feds-gave-safety-prize-transoceans/story?id=10528236) for their outstanding performance *in 2008*.
So, basically , the feds claimed they deserved the prize because in 2008 they did such a good job and their only accident was the 2010 oil spill. Never mind that it was so huge that in 2019 there was still oil floating around the Mexican Gulf from that very same spill.
“Pride and Accomplishment”
Edit:
Oh yeah, and also “Don’t you have phones?”
Thalidomide, which was a popular over the counter drug in the 60s, caused thousands of children to be born with severe birth defects as it was never properly tested before being released and was marked as safe for pregnancy.
They fought for years to not pay out and said every reported case was due to nuclear fallout and botched home abortions.
This literally just happened yesterday. Disney released a new trading card game through a company called Ravensburger. A new set went on sale on their website yesterday morning, and the company once again didn’t prepare for the amount of traffic, so it crashed their queue system. Ravensburger then blamed it on a ddos attack instead of admitting they weren’t ready to handle the amount of traffic.
Not really a “company” per se but there was that time the Australian census site crashed on census night and the government blamed it on a targeted DDOS attack (also known as the entire population of Australia trying to access the same site at the same time).
When Rockstar decided to remove about 200 vehicles from GTA Online and claimed it was to improve the user experience… that’s gotta be somewhere up in the top 100, at least?
I online ordered my groceries to be delivered. Eighty-eight items, fruit, milk, meat.
The groceries appeared on my doorstep, I went out to get them. Then I said “I expected more than th…. Hey, where is the milk? Where is the meat?”
So I go online, and the official explanation was that 57 out of 88 items were “unavailable”.
Nope. I guessed what had happened. The shopper had gotten like a third of the way done, and then stopped for whatever reason. Oh, and “WatTheHell. I’ll deliver what I have.”
But I called and asked about it anyway.
The response was in a “Idunno” voice. “Well, maybe that many items *were* unavailable.”
No way. The day that big store is out of milk, that will be a story on the town’s evening news.
Venezuelan power company (destroyed by poor management, cronyism and corruption) blamed outages on an iguala getting on the cable 😂
I had a flight booked with Delta from New York to Canada. I got an email a week before the flight was scheduled saying it was cancelled. No reason was given. I called the airline and the agent told me it was cancelled due to weather. A week beforehand. So I said to the agent, wow, you guys are really putting a LOT of faith in the meteorologists! Anyway I found out later that they cancelled the route and didn’t bother to tell customers or employees apparently…
Powerball
“We’ve listened to what people want, and that’s higher jackpots!”
The only way to do that is to increase the price or make it harder to win so the total goes up. Powerball did BOTH! from $1 to $2, a 100% increase, followed by extending the numbers to choose from. Doubling the cost and making it exponentially harder to win.
They duped everyone, and the only people who understand have taken statistics in college. It’s the fleecing of the ignorant.
Pokemon saying they cut the national dex so they could focus on animations and balance, then continued to use the same models and animations while bringing back all of the most overpowered pokemon.
MBMMaverick: Seriously? I paid 80$ to have Vader locked?
EA’s response:
The intent is to provide players with a sense of pride and accomplishment for unlocking different heroes.
As for cost, we selected initial values based upon data from the Open Beta and other adjustments made to milestone rewards before launch. Among other things, we’re looking at average per-player credit earn rates on a daily basis, and we’ll be making constant adjustments to ensure that players have challenges that are compelling, rewarding, and of course attainable via gameplay.
We appreciate the candid feedback, and the passion the community has put forth around the current topics here on Reddit, our forums and across numerous social media outlets.
Our team will continue to make changes and monitor community feedback and update everyone as soon and as often as we can.
Worked for a company that 3 divisions. Electrical construction (where I worked), armature, and maintenance.
Every year, the company would set projections, if income was kept in the black, and accidents to a minimum, every employee in each branch got a sizeable Christmas bonus check.
Ten or so years before I came on, one of the c-suites figured if they could keep that bonus… they got to keep the money. Just make up a reason the bonuses didn’t go out.
So the armature department got a letter saying “sorry, electrical went waaay over budget. Blame those a******s.” While maintenance got a letter blaming armature, and electrical got aimed at maintenance.
The departments were fairly independent, so thinking appeared to be that they’d all turn on each other, and C’s would pocket or “reinvest” what should have been bonuses (they knew something was fishy because that same year the CEO bought a nearly 1 million dollar boat, while the CFO could suddenly afford a 300k car)
What they forgot, however, was that construction workers gossip worse than hair stylists with a vendetta. So they all knew something shifty was up.
So next year, there were 20+ reported accidents. But no one knew who/where/how/what. So after about 4 years of being shady, the company just canceled the bonus program all together.
“The one opinion, which I think is extreme, is represented by the NGOs, who bang on about declaring water a public right. That means that as a human being you should have a right to water. That’s an extreme solution. The other view says that water is a foodstuff like any other, and like any other foodstuff it should have a market value” – Peter Brabeck-Letmathe, former CEO of Nestle.
Lululemon’s founder, when confronted about the threadbare, see-through quality of his yoga pants claimed that it was women that were “bigger” shouldn’t use them because their thighs rub together, damaging the fabrics.
Nope, you just sell crappy, overpriced pants.
QANTAS our national airline in Australia. They were booking ghost flights, flights they never intended providing. Taking bookings from people even after the flights had been cancelle total fraud, idea was to provide cheap flights then so people wouldn’t book flights with other airlines, then cancel them.
When called out on it Qantas said it’s customers understood that they weren’t booking a flight at a specific time to go to a specific destination but just booking and paying for a ticket.
Optus a major phone and internet provider here, whole system completely crashed, no phone internet, could not even make emergency calls. No explanation from Optus when service would resume no explanation on cause of failure.
Optus did say they had details on their website which people could access, but Optus customers could not of course as the internet and phone services were down.
[China’s birth rate crisis is so intense that Nestlé is closing a baby formula plant due to dwindling demand](https://fortune.com/europe/2023/10/20/nestle-baby-formula-plant-ireland-close/)
Nestle: Demand in China is too low so we’re closing a factory in Ireland and moving production… to China.
I mean, I get that we all think John Q. Public is too dumb to analyze anything these days, but this is a blatant PR lie and Orwellian doublespeak.
The reason we’re not making any money is because our fans are toxic and sexist.
I worked doing tech support in South Florida. After 9/11 our company changed the raise policy from quarterly to annually, dropped the top pay from $22 down to 15 and canceled the free laptop program. They claimed the cut backs were necessary due to 9/11 affecting our business.
My property manager tried to get me to sign a contract saying I wouldn’t sue for anything I’d ever reported in the past, admitting that I was always late on rent (literally never have been), and that I agreed to pay 63$ to sign the contract.
The judge was not impressed with his explanation that the 63$ was for “special” fees because he had to write and print that farce.
Even though someone posted something entirely anti-Semitic and our CEO said it was “the truth” it is being misreported that he himself is anti-Semitic.
Probably the recent failure of the entire mobile phone network by Optus, the second largest provider in Australia. Many businesses lost money because their payment systems were down. The technicians at Optus were locked out of systems because they were on the Optus networks. The CEO just resigned over it.
The reason given for the failure was an upgrade being made by a “subcontractor.”
The “subcontractor” was Singtel in Singapore who owns Optus.
An accident has occurred at the Chernobyl nuclear power plant as one of the reactors was damaged
Claiming I was incompetent and firing me when they had me doing a job with barely Any training and the training I did get was for a job I wasn’t doing.
When they really just over staffed themselves and didn’t want to pay the sign on bonus
SOCIAL
5 Considerations for the Future of X Following Elon’s Anti-Advertiser Comments This Week
So what comes next for Elon Musk’s ambitious “everything app” now that he’s insulted those in charge of the platform’s key revenue stream?
Will X be forced to shut down? Will Elon pay out of his own pocket to keep it running? Can X possibly make enough from subscriptions to offset its ad losses?
There are a range of considerations, and while we don’t have all the answers (because only Elon and Co. have the full data), based on reported insights, here’s what we do know about how X is currently placed.
Will X go bankrupt?
Maybe. Again, we don’t have a full overview of X’s financial situation, because as a private company, it’s no longer required to report quarterly performance statements.
But we do know that X was already set to post a loss for FY 23 before this latest advertiser exodus.
Based on previous data reported by Twitter, the platform generated around $3.96 billion from ads in 2022. In September, Elon said that the company’s ad revenue has halved since he took over, due to concerns about his new direction for the platform, as well as broader market pressures, so we can assume, then, that before this latest ad pause, X had been on track to bring in around $2 billion in ad revenue for the year.
Which is still a lot, and even with a range of advertisers pausing their campaigns, that’s only going to impact this quarter, which, based on a recent report from The New York Times, will cost X around $75 million in ad revenue overall.
So the platform’s still likely on track to bring in around $1.9 billion for the year. Which is a lot less than what Twitter had been generating, but even so, that’s a lot of money that the company’s churning over. So it’s not exactly close to shutting down entirely, depending on costs.
Which is the other complexity in this equation.
In 2022, Twitter’s costs were set to exceed $5 billion before Musk took over at the app, with around $3.8 billion of that in staff costs alone. That’s why Elon set about his drastic cost-cutting plan, which included a cull of 80% of staff, shutting down regional offices, re-negotiating rent deals, closing down a key data center, etc.
We don’t know what the full impacts of these cost-saving measures has been, but we can estimate that, in combination, X’s costs may have been brought down to around $2 billion overall, though there have also been additional costs in GPUs for xAI and other elements that Musk and his team have implemented (it’s unclear if and how these costs are attributed to X Corp, and how that relates to X’s operating margins).
But for the sake of this exercise, let’s say that X’s costs are now $2 billion, and its income from ads is $1.9 billion or so. X is also seemingly on track to bring in an additional $650 million from subscriptions and data/API sales, so overall, even with this ad boycott, X is still looking okay, maybe.
But then there’s also the debt load that X took on as part of Musk’s takeover deal. In order to acquire the full funding for his $44 billion offer for the platform, Elon also took on debt that will cost X an estimated $1.2 billion per year in interest payments.
So X is currently looking at income of around $2.5b for the year, and costs of $3.2b. Which means that any further loss will only compound this, and if advertisers stay away into the new year, things start to look pretty bleak pretty fast.
So, in summary, right now, for this year, X will probably be okay. But as the losses mount, by March next year, if things don’t turn around, X could be facing billions in losses, which may indeed end up putting it out of business.
Elon’s the richest man in the world, couldn’t he just keep X afloat with his own cash?
Probably, but it’s not necessarily as simple as it seems.
Elon does, of course, have access to billions in capital, and various means to raise more. But at the same time, he can’t just head to the bank and take out a few billion from the ATM to keep X going.
Musk has previously stated that the majority of his wealth is tied up in Tesla, SpaceX, The Boring Company, etc. So while he does have hundreds of billions to his name, he’s not necessarily liquid, and when he wants to cash out, there are processes that must be followed, and impacts as a result, so it’s not as simple as just paying it out of his personal wallet.
In order to find his purchase of Twitter, for example, Elon sold around $7 billion of Tesla stock. Which did not sit well with Tesla investors, who essentially then forced him to promise not to sell any more Tesla stock due to fears that it could tank the company’s value.
Musk also borrowed $1 billion from SpaceX around the time of his Twitter acquisition, which has since been repaid.
So, essentially, Musk can fund X as an ongoing project, but pumping billions into something with no return is not smart business, and won’t be as easy as just transferring Tesla money into X’s coffers.
Maybe other backers will help him, and be willing to take some hits, if Elon can sell them on a path to profitability. But again, telling your key revenue partners to “go f— yourself” is probably not going to win him a lot of corporate support, even from those who view him as a genius.
X is moving towards subscriptions, will that offset its ad losses?
No. Not even close, though that did, initially, seem like Musk’s ambition.
In November last year, shortly after Elon took over at Twitter, he outlined a vague plan to make subscriptions a key revenue driver, eventually accounting for 50% of Twitter’s overall revenue intake.
As per the above figures, that would mean that X would need to be bringing in more than $2 billion per year from subscriptions at its FY 2022 income levels, which equates to around 12 million paying subscribers at X’s highest priced subscription tier.
Thus far, however, X hasn’t even been able to convince a million people to pay for X Premium.
Though you can see the idea, conceptually, and why Musk thought that this was a viable option. Elon’s belief is that the majority of people support his “free speech” push in the app, and at 250 million+ daily active users, convincing just 5% of them to pay seems like an achievable target.
Evidently, that hasn’t been the case.
And while upping the cost of API access, and selling verification to brands has helped to bring in more supplementary revenue, it’s not close to bringing in anywhere near what X generates from ads.
Even at its now lower ad revenue intake, of around $2 billion for the year, its other income streams are far from generating 50% of its overall revenue.
Last month, X said that subscriptions and data sales now make up 25% of its overall intake, which seems like a positive, but that’s mostly due to X’s overall ad revenue declining so much, not its subscription intake increasing.
Will advertisers come back?
This, ideally, would be what X is aiming for, but Musk’s comments this week indicate that he’s not going to any effort to rectify the situation.
In fact, he’s actively pushing ad partners away, while also insulting publications and journalists, who have long been the key drivers of information flow in the app.
The disconnect here seems to be that Elon is associating advertisers abandoning his app with his own ideological view on what X is, and where it stands within the broader “free speech” debate.
This is evident when you look at Musk’s specific wording in his criticism of advertisers this week:
“If somebody is going to try to blackmail me with advertising, blackmail me with money, go fuck yourself. Go fuck yourself. Is that clear? I hope it is.”
Musk’s view is that advertisers are trying to make X tow the line on perceived censorship, which is not actually what’s happening.
As articulated by YouTube star Hank Green:
“Fortune 500 companies aren’t overly moral actors. They make decisions based on whether they think they will make more or less money. Advertisers are not leaving Twitter because they are trying to make a statement or achieve some goal (which would be a boycott). They are leaving Twitter because they aren’t sure whether advertising on the platform is delivering negative or positive value, and why spend a bunch of money doing something that might actually be hurting you.”
Musk’s viewing this from an ideological standpoint, but as Green notes, his business partners are worried about their respective brand value, not controlling what can and cannot be said.
That misunderstanding is at the core of Musk’s defiance, and his stance against advertiser pressure.
Will Elon see it that way, and look into potential failings in the platform’s ad serving system, and indeed his own comments, and how they represent X as an entity?
It seems, at this stage, that Elon is determined to make a stand, that he will not be silenced, even if what he shares is wrong/misinformed/harmful, etc.
That being the case, I’m not sure how Yaccarino and her team are going to be able to pitch ad partners on an improved situation moving forward.
How long does X have?
Well, all of this, of course, is variable, and dependent on a range of factors along the way.
Maybe, Elon does decide that he wants to work with ad partners, and improve the situation, and maybe that then secures X’s user base, and brings back ad partners as a result. X still has hundreds of millions of active users, and offers significant advertising opportunity as a result, so there is still a chance that X can turn things around once again.
But right now, most of X’s growth plans are still vague, while Elon has shown no interest in re-aligning the platform in this respect.
X is looking to implement payments, but is years away from making this a reality. And even if does bring payments into the app, why would people use such a service?
X is rolling out its Grok AI chatbot to more users, but most people already use ChatGPT, and there’s not really a significant differentiation between AI chatbots to make this a more attractive option.
X has added jobs, is looking at dating, and is pushing for more long-form text and video content, all of which is already available in more fully-formed, functional offerings in other apps.
With no big, game-changing advances on the horizon, and Elon standing firm on his advertising stance, I imagine that X could be in significant trouble by March next year, as its Q1 results will show just how far off it is, and how much of a loss it’s facing as a result.
X won’t necessarily report this publicly, but that’s when you’re likely to see more cost-cutting from the app, which will be a signal that it’s in serious trouble. And given that Musk has already cut most elements to the bone, it may well be staring down a massive loss, which could see it considering bankruptcy mid next year.
Things might change, X might re-assess its stances, and this could end up being a blip in its longer-term trajectory. But right now, Elon seems determined to die on his “free speech” hill, cheered on by his many fans, who hang on his every utterance, desperate for his acknowledgment in any form.
If those are the people Musk really wants to impress, then X may well end up being the cost.
And right now, Elon seems just fine with that.
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