Tech bubbles or Great Leaps Forward: Are Meta, and Twitter outgrowing to the next level?

Virendra Pandit 

New Delhi: Two decades ago, with the turn of the second millennium after Jesus Christ, the dotcom bubble burst worldwide. Now, technology-enabled social media and other companies appear heading the same way, as their bubbles burst one after another.

But some of them might evolve differently to the next level. Social media platforms, for example, could metamorphose into communicators beyond Earth!

Is there a silent method in the visible chaos of Facebook owner Meta, and Twitter? Are they completely overhauling themselves from relatively free and democratic platforms for all to paying elite ones, the digital monarchs and the space-trotters?

Also, can a company like Twitter willingly race to the bottom? Is Elon Musk winding up Twitter and then reviving it in another avatar?

The world’s wealthiest man, who now owns Twitter, may have plans to completely convert it from an international to an inter-planetary communication service—Elon Musk is embarking upon his ambitious space tourism packages in the coming years! So, is he encouraging more employees to quit so he could recruit those who fit into his plans?

In an email late Wednesday, he warned employees of “difficult times ahead,” with “no way to sugarcoat the message” about the economic outlook for the company. He ended employees’ ability to work remotely unless he approved it.

After firing half of its workforce of 7,500, including several top-level executives, Twitter’s new owner Elon Musk, in his first address to his remaining staff, warned that the company could face bankruptcy if it doesn’t start generating more cash, according to media reports on Friday.

Earlier, he had said the microblogging platform was losing USD 4 million daily.

The warning came amid a tumultuous start to Musk’s era reign at the social media company soon after he bought it out for USD 44 billion in October and immediately set out to mold it his way. His ways to generate cash included the Twitter Blue ‘verification’ for USD 8 per month, which the hoi polloi wouldn’t possibly pay. The users’ payment would be ‘adjusted by country proportionate to purchasing power parity. In India, it costs USD 8.9 (Rs. 719) per month.

But the move also came with a big headache as brand impostors infiltrated the platform. On Friday, Musk said there are too many corrupt and fake legacy Blue “verification” checkmarks on Twitter, and he will remove them in the coming months.

While his Twitter buyout removed the microblogging platform from the scrutiny of public markets, Musk loaded the company with nearly USD 13 billion of debt, which is now in the hands of seven Wall Street banks that could not offload it to investors, the media reported.

The users’ confidence in Twitter eroded so rapidly that, even before Musk’s bankruptcy comments, some funds offered to buy the loans for as little as 60 cents on the dollar, a price typically reserved for firms seen in financial distress.

Addressing his employees, Musk seemed to encourage them to quit on their own. Among his warnings were: the staff should brace for 80-hour, seven-day work weeks and fewer office perks like free food. And he ended the pandemic-era flexibility that allowed employees to work from home.

“If you don’t want to come, resignation accepted,” he said.

Musk also dropped broad hints at products he would like to introduce, including payments, ads that are more conversational, and interest-bearing checking accounts. Onboarding to the Twitter app should be smoother, as with TikTok, he said.

The debt Twitter took on to finance Musk’s buyout is leaving it with interest costs that, by one estimate, will surge to USD 1.2 billion a year. The social network has seen a pullback from some advertisers that are concerned about Musk’s plans for content moderation.

Debt investors and credit raters are also showing little confidence. The company’s banks have been quietly sounding out hedge funds and other asset managers for their interest in buying a chunk of the company’s debt, the media reported.

Moody’s Investors Service recently slashed Twitter’s credit rating deeper into junk territory. “Twitter’s governance risk is highly negative, reflecting Moody’s expectation for aggressive financial policies and concentrated ownership by Elon Musk,” the rating firm said.