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Tech billionaire Elon Musk is reportedly planning to lay off close to 75 per cent of Twitter’s workforce if his takeover attempt is successful.
Job cuts are expected soon no matter who owns the company, according to a Washington Post report, which cited interviews and documents.
The news of Musk’s plans, should he ultimately take over the business, come at a difficult moment for Twitter, the report said.
The company said in July that it had already “significantly slowed hiring” amid a wider economic downturn in the tech industry, where many companies have announced recent hiring freezes and layoffs.
According to the report, human resources staff at the social media company have told employees that they were not planning for mass layoffs, but documents showed extensive plans to push out staff and cut down infrastructure costs were already in place before Musk offered to buy the company.
But while Twitter’s current management planned to lay off 25 per cent of the staff by the end of next year, the new report revealed Musk wants to reduce the company’s 7,500 employees down to a “skeleton staff” of around 2,000 people.
The layoffs will undoubtedly have an impact on Twitter’s daily operations, including its ability to moderate harmful content and combat security issues, the report said.
This comes after a scathing whistleblower report in September accused Twitter of falling short on both fronts, alleging “egregious” deficiencies at the company, if added.
On April 14, 2022, Musk offered to purchase Twitter, Inc., for $43 billion, after previously acquiring 9.1 percent of the company’s stock for $2.64 billion and becoming its largest shareholder.
Twitter had then invited Musk to join its board of directors, which Musk at first accepted before subsequently declining. Twitter announced a “poison pill” strategy the next day to resist a hostile takeover.
On April 25, Twitter’s board of directors unanimously accepted Musk’s buyout offer of $44 billion, with the company set to be taken private. Musk stated that he planned to introduce new features to the platform, make its algorithms open source, combat spambot accounts, and promote free speech.
Musk announced his intention to terminate the agreement in July, asserting that Twitter had breached their agreement by refusing to crack down on spambot accounts.
The company filed a lawsuit against Musk in the Delaware Court of Chancery shortly thereafter, with the trial set to begin on October 17. However, on October 4, Musk announced that he had decided to move forward with the acquisition after all.
Reception to the proposed buyout has been mixed, with praise going to Musk’s planned reforms and vision for the company but criticism over fears of a potential rise in disinformation and harassment on the platform.
On October 3, Musk’s legal team informed Twitter that Musk had changed his mind and decided to move forward with his proposed acquisition at the originally agreed-upon price of $54.20 per share, on the condition that Twitter drop its lawsuit.
The reason for this reversal was attributed to concerns from Musk’s team that they would not be able to prove that there was a material adverse effect justifying a break from contract. Musk and Agrawal’s depositions were originally scheduled for October 6 and 10, respectively.
In response, McCormick asked both sides to propose to her how they should proceed. Twitter shares surged by 23 percent as a result of Musk’s announcement.[134] Neither Twitter nor Musk responded to McCormick’s request, prompting her to announce that the trial would go forward as planned
On October 6, McCormick agreed to a request by Musk to postpone the trial to October 28 so Musk could finalize his debt financing for the acquisition, adding that the trial would be rescheduled to November if the deal did not close by then.
A week later, it was revealed that Musk was being investigated by the U.S. government for his conduct in the proposed buyout.
On October 19, Musk said in an earnings call that while he was “obviously overpaying for Twitter right now, the long-term potential for Twitter in my view is an order of magnitude greater than its current value.”
On October 20, The Washington Post reported that Musk would fire 75 percent of Twitter’s workforce of 7,500, lowering it down to just over 2,000 workers.
