Twitter board agrees to $44 billion sale to billionaire Tesla founder Elon Musk

[LadyTevar]

The only feasible plan for Twitter at this point (from a Musk point of view), would be -

Make sure Musk is the primary creditor (which may or not be possible)
Declare bankruptcy, folding the company and wiping out the debt (which may or may not be possible, multinational bankruptcy are incredibly complicated). This includes taking the platform completely offline.

During the 'offline period', have developers go over the software, and change it as required for the last step.

Musk as primary creditor gets the assets of the company. (which may or may not be possible).
Relaunch the company using the old assets.

Musk isn't the primary creditor. Musk is the debtor.

He bought twitter through a series of loans from a whole slew of banks, with some added capital from the Saudis and some other parties.

He is on the hook for that debt and cannot easily discharge it.

That said, presumably (unless he was an absolutely colossal buffoon) the collateral for the debt is... twitter.

No bank is going to foreclose on him because no bank is going to want to piss off one of the world's richest and most active men just to take hold of twitter. It would be like slapping Joe Biden in the face with a trout in return for receiving a sack of literal pick excrement.

In a very weird way, as long as Twitter remains mostly useless and a failing enterprise Musk remains fairly insulated from the demands of creditors and will continue to have a pretty free rein in what he's doing.

I thought Musk was stupid and put up Tesla

[Straha]

I thought Musk was stupid and put up Tesla

That was the original plan. He changed financing as time went on probably to avoid torpedoing Tesla stock.

[bilateralrope]

That said, presumably (unless he was an absolutely colossal buffoon) the collateral for the debt is... twitter.

No bank is going to foreclose on him because no bank is going to want to piss off one of the world's richest and most active men just to take hold of twitter. It would be like slapping Joe Biden in the face with a trout in return for receiving a sack of literal pick excrement.

In a very weird way, as long as Twitter remains mostly useless and a failing enterprise Musk remains fairly insulated from the demands of creditors and will continue to have a pretty free rein in what he's doing.

The banks might hold off until for a while. But the other creditors won't. All those people owed money because of bills Musk is refusing to pay. Including some of Twitter's landlords.

Once Twitter goes bankrupt, I'm expecting the banks to extract as much money as they can. Which probably means selling Twitter to whoever will buy it. Question is, who would want Twitter after Musk has driven it into the ground ?

[Straha]

That said, presumably (unless he was an absolutely colossal buffoon) the collateral for the debt is... twitter.

No bank is going to foreclose on him because no bank is going to want to piss off one of the world's richest and most active men just to take hold of twitter. It would be like slapping Joe Biden in the face with a trout in return for receiving a sack of literal pick excrement.

In a very weird way, as long as Twitter remains mostly useless and a failing enterprise Musk remains fairly insulated from the demands of creditors and will continue to have a pretty free rein in what he's doing.

The banks might hold off until for a while. But the other creditors won't. All those people owed money because of bills Musk is refusing to pay. Including some of Twitter's landlords.

Once Twitter goes bankrupt, I'm expecting the banks to extract as much money as they can. Which probably means selling Twitter to whoever will buy it. Question is, who would want Twitter after Musk has driven it into the ground ?

There's two groups of creditors here. The people who might be able to claim equity in the company (the banks) and the people who are owed money (landlords, the air plane folks, some of the caterers, etc.)

For the latter, Musk is engaging in hardball negotiating. This sort of thing where someone new comes in and declares "What the hell, you've been taking us to the cleaners for inadequate services! I refuse to pay!" is somewhere between 'not unheard of' and 'standard' when it comes to big business tactics. We can debate the wisdom of these actions, but they aren't necessarily a sign of faulty reasoning and at any rate the money is there to pay them and if push comes to shove they will be paid. As it stands, they'll probably be paid just at a discounted rate.

For the former, well... I think they were the bigger fools here. Lending Musk money to take over a fundamentally unprofitable enterprise in hopes that he can magic profit into it? Lunacy. Rather than retread area though, I'll just quote Matt Levine:

If Twitter’s strategy is to just not pay bills, well, it has $1.2 billion of interest bills to pay each year, and surely Musk is curious about what will happen if he doesn’t pay those. I certainly am! The obvious standard analysis is “Musk’s banks will call a default, put Twitter into bankruptcy, and seize it for themselves,” and I have to say I don’t see it? If I were the Morgan Stanley banker in charge of launching a legal fight against Elon Musk where the prize is owning Twitter, I would quit? If Musk came to me and said “I’m not going to pay you the $1.2 billion, but I’ll give you a stick of gum and tweet something nice about you,” that would probably seem like a reasonable compromise? Like if the banks do manage to foreclose on Twitter, what will be left?

Better to make nice with the very very very very very rich man and hope that there will be a profit one day than to piss him off and, at best, get a completely and utterly broken company as your... victory prize? Truly no winning there.

[bilateralrope]

There's two groups of creditors here. The people who might be able to claim equity in the company (the banks) and the people who are owed money (landlords, the air plane folks, some of the caterers, etc.)

For the latter, Musk is engaging in hardball negotiating. This sort of thing where someone new comes in and declares "What the hell, you've been taking us to the cleaners for inadequate services! I refuse to pay!" is somewhere between 'not unheard of' and 'standard' when it comes to big business tactics. We can debate the wisdom of these actions, but they aren't necessarily a sign of faulty reasoning and at any rate the money is there to pay them and if push comes to shove they will be paid. As it stands, they'll probably be paid just at a discounted rate.

See that article I posted about Imply starting legal action over Musk not paying the bill. Musk hasn't even tried Trump's trick of paying just enough to make legal action cost more than the largest possible judgement.

I've also seen something about the landlord of one of Twitters offices putting a notice on their door demanding payment. Which apparently is the start of evicting a tenant for non-payment of rent. But I can't find an article right now. Turns out, when you stop paying for an ongoing service, the service provider looks for a way to stop providing it.

Better to make nice with the very very very very very rich man and hope that there will be a profit one day than to piss him off and, at best, get a completely and utterly broken company as your... victory prize? Truly no winning there.

They can always get the assets auctioned off. Or maybe someone will want to buy Twitter as a complete company. Either way, I'd expect the banks to take action once the other creditors start collecting money. Or maybe wait until the bankruptcy proceedings start.

Then there is the question of if someone can pierce the corporate veil due and go after Musk's personal assets to cover Twitters debts.

[Straha]

There's two groups of creditors here. The people who might be able to claim equity in the company (the banks) and the people who are owed money (landlords, the air plane folks, some of the caterers, etc.)

For the latter, Musk is engaging in hardball negotiating. This sort of thing where someone new comes in and declares "What the hell, you've been taking us to the cleaners for inadequate services! I refuse to pay!" is somewhere between 'not unheard of' and 'standard' when it comes to big business tactics. We can debate the wisdom of these actions, but they aren't necessarily a sign of faulty reasoning and at any rate the money is there to pay them and if push comes to shove they will be paid. As it stands, they'll probably be paid just at a discounted rate.

See that article I posted about Imply starting legal action over Musk not paying the bill. Musk hasn't even tried Trump's trick of paying just enough to make legal action cost more than the largest possible judgement.

I've also seen something about the landlord of one of Twitters offices putting a notice on their door demanding payment. Which apparently is the start of evicting a tenant for non-payment of rent. But I can't find an article right now. Turns out, when you stop paying for an ongoing service, the service provider looks for a way to stop providing it.

Yes, but, again this is hardball negotiating that is done between big businesses and other enterprises, especially when there's a new CEO/CFO. New person comes in and postures and screams that their contractors are abusing them and parasitically draining the company of all its resources. Payment is cut off, the other side threatens to cut off service, the first side then says that if they cut off service there ain't no way payment is coming back, both sides lawyer up and threaten to have a showdown, and then they work out a deal. It can be a parting of ways for a suitable price, a renegotiated contract, or whatever else.

This is what you do. Is it kinda silly to do it this harshly while under intense PR scrutiny? Yeah, probably? But what's the damage besides people who don't know what they're talking about scoffing at the practice? Not much. And in a world where Twitter isn't publicly traded who cares?

Better to make nice with the very very very very very rich man and hope that there will be a profit one day than to piss him off and, at best, get a completely and utterly broken company as your... victory prize? Truly no winning there.

They can always get the assets auctioned off. Or maybe someone will want to buy Twitter as a complete company. Either way, I'd expect the banks to take action once the other creditors start collecting money. Or maybe wait until the bankruptcy proceedings start.

Then there is the question of if someone can pierce the corporate veil due and go after Musk's personal assets to cover Twitters debts.

What assets are there that are worth anything? And who is going to buy a company that one of the world's richest men wasn't able to save from bankruptcy? And why in the hell would the banks want to trade a theoretically enforceable contract against one of the richest men in the world in case the company is, somehow, saved for the joys of getting to shovel more fat stacks of cash into a landfill that is on fire?

The end result you're describing involves banks like Morgan Stanley to pony up tens of millions of dollars to piss off one of their biggest clients who has access to Billions of dollars of deals and sway over other multi-billion dollar corporations for a, literally, toxicly broken corporation that has already seen all of its top talent either fired or flee and where the very act of suing to reclaim it is going to do nothing but damage the underlying value of the corporation.

This is not a bank repossessing a house when a owner defaults on the mortgage. There are far bigger and more pressing calculations afoot, and these banks are not going to shoot themselves in the foot over something like this.

[The_Saint]

I'm still at a loss as to how the banks agreed to lend the money in the first place. Surely due diligence of [non/barely profitable company] + [huge debt] = [bad investment]. And it is an investment in so far as the banks will want their money back regardless of if it goes belly up.

[Ralin]

and where the very act of suing to reclaim it is going to do nothing but damage the underlying value of the corporation.

Not that that isn't all true, but it seems evident that removing Elon Musk as the owner is likely to increase the value of the company by a non-negligible amount all by itself.

I'm still at a loss as to how the banks agreed to lend the money in the first place. Surely due diligence of [non/barely profitable company] + [huge debt] = [bad investment]. And it is an investment in so far as the banks will want their money back regardless of if it goes belly up.

Big money bank people aren't anymore immune to his real-life Tony Stark bullshit than the general public. If not less so.

[Straha]

I'm still at a loss as to how the banks agreed to lend the money in the first place. Surely due diligence of [non/barely profitable company] + [huge debt] = [bad investment]. And it is an investment in so far as the banks will want their money back regardless of if it goes belly up.

When the richest man in the world comes to you and asks for a 'small' loan, he's good for it. Twitter isn't going to bankrupt Elon Musk. Elon Musk will still be making multi-billion dollar deals going forward and that's still going to require financialization and if you can stay on the top of his mind for those deals... well... that's not not worth it.

Also, normally the banks would repackage and sell this debt off to customers, making them whole pretty quickly while collecting fees all around. Except, in the time between when they wrote the contract to lend the money and the time when the deal went through interest rates went up significantly which means that there would be little to no interest in buying this debt because the interest is below market, and that the banks are (in effect) losing hundreds of millions if not billions of dollars. But, them's the breaks in the finance business.

All of that said, this might not be ideal for the banks in a whole lot of ways, but I don't think they're not going to get money back, with interest, over time. The questions are how much money with how much interest over how much time.

and where the very act of suing to reclaim it is going to do nothing but damage the underlying value of the corporation.

Not that that isn't all true, but it seems evident that removing Elon Musk as the owner is likely to increase the value of the company by a non-negligible amount all by itself.

Would it? Elon is, despite all of his many many many flaws, a committed owner willing to sink an immense amount of money into a project whose only true value is that if you give it enough time it may, one day, make a return. Put differently, Twitter is a big black box where the entire proposition is that if you pour money into it now then it might possibly in the not too distant future start spitting out more money than is being put in. That proposition requires someone with dump trucks of cash who is willing to pour them into Twitter.

Pre-Musk Twitter was able to justify this through the logic of VC funding. That well had been beginning to run dry which was why the board of twitter was trying to make moves to find something else. With Musk no one, I think, doubts his short to medium term commitment to twitter and while his decisions may seem rash and impetuous (because they are rash and impetuous) it also turns out that the management before him was basically balls of rubber bands and inertia. The banks neither want to find and supply the dump trucks, nor do they want to be in a position to figure out these management woes.

Put differently, Elon ain't an ideal owner, but he's basically the only owner who makes sense for Twitter in its current position. And for the banks, this is a loan, they're not shareholders. Management isn't their decision, ownership might be if Elon defaults on his loans (big if) and if you want to change ownership you better be prepared to be the one holding the hot potato stinking bag of pig excrement.

[bilateralrope]

Twitter outage: Elon Musk says ‘works for me’ as users report problems with website

Henry Belot
Thu 29 Dec 2022 01.34 GMT

Twitter users have reported a massive global outage with many unable to access the website and its features for hours.

According to downdetector.com, which tracks site traffic, the website became unavailable shortly before midnight GMT (11am Thursday AEDT, 7pm Wednesday EST), with outages most commonly reported on website rather than the app.

Within an hour, the website had recorded more than 10,000 user reports of problems accessing Twitter.

The London-based internet monitor NetBlocks said “Twitter is experiencing international outages affecting the mobile app and features including notifications”.

“The incident is not related to country-level internet disruptions or filtering.”

Many users were still able to use the platform, while others were met with an error message that read “something went wrong, but don’t fret – it’s not your fault”.

One user in Ireland reported “difficulties logging into Twitter tonight … I’m supposed to be asleep but now I’m watching news stories on the global twitter crash”.

Elon Musk, who bought Twitter for $44bn in October, responded to users reporting problems by tweeting “works for me”.

Elon Musk
@elonmusk

Replying to @BillyM2k and @greg16676935420
Works for me
2:29 PM · Dec 29, 2022

Hours later, Musk tweeted that “significant backend server architecture changes” had been made and that “Twitter should feel faster”.

Concerns about longer and more regular outages increased when Twitter slashed, by some estimates, up to half of its workforce with little notice under Musk’s tenure.

About 50 percent of Twitter’s 7,500 staff were sacked in Musk’s first week. In his second week, about four in five of the firm’s 5,500 contractors were released.

The mass layoffs reportedly gutted teams that cover human rights, machine learning ethics, curation, communications and accessibility.

In July, before the job losses, Twitter experienced one of its longest outages for years, with the social network unavailable to users on web and mobile for almost an hour.

Earlier this month, Musk confirmed he would step down as chief executive once a suitable replacement was found, citing the company’s finances as a reason to delay his promised departure.

Twitter stops working and the first thing Musk says is "Works for me". How can anyone interpret that as anything but him not caring about the outage because it doesn't affect him directly ?

Also, any predictions for when the next outage like this will hit ?

[Solauren]

Next Outage?

I'd expect them start happening 1 - 2 a month, then increase. There is a lack of staff to maintain things, so problems are going to happen.

[EnterpriseSovereign]

I'm surprised it hasn't started happening sooner, outages are going to increase in frequency, duration and users affected.

[bilateralrope]

Another outage:

Twitter Appears To Be Slow or Even Down for Some People in Australia and New Zealand

Zachariah Kelly
Published 8 hours ago:
January 4, 2023 at 9:03 am

It seems to be every day now that we’re writing a story on Twitter, and today’s no exception. Twitter appears to be down or poorly functioning for some users in Australia and New Zealand.

Over on the website Down Detector, issues with the Twitter app and website started to be reported en masse in Australia and New Zealand, according to website Down Detector.

Outages appeared to begin at 6:39am AEST, according to Down Detector. The issues have also been flagged by Aussie Service Down.

It doesn’t look like this issue is occurring in other regions, as issues within the same timeframe aren’t being reported on Down Detector’s country hub pages.

Some users are reporting that you can access Twitter without these issues by using a VPN set to another country. I’ve just tried, and can confirm that it works. It’s a silly solution, but hey, there you go.

During the time of writing this article, I’ve been able to regain some access to Twitter’s features, however, this has been sporadic. Access to the inbox, notifications and search feature is limited at best and completely unusable at worst at the moment.

It appears that the website is recovering, but I’m still getting lots of error messages.

It’s the latest outage to hit Twitter since Elon Musk’s acquisition. In December, we reported that notifications keep breaking on the social media site. Just last week, the service suffered a major worldwide outage. It’s also been glitching pretty bad since New Years Eve.

We’ve reached out to Twitter for comment, but of course, since Twitter doesn’t have a media department, we’re likely waiting around for Musk to tweet something.

If you’ve got any information on this story, I’d love to hear it. We’ll update this story later on if we notice a change or if an official statement is put out.

Update, Wednesday 3:54pm: Twitter appears to still have issues in Australia, with some users able to access it and some users unable to. Those with access are reporting slow loading times or parts of the website (such as links and search) not working.

I'm in NZ and, at the time of writing this post, I'm having to refresh multiple times to get past the "something went wrong" error.

I wonder if Musk is going to repeat his "works for me" response this time.

[EnterpriseSovereign]

Looks like that's the second domino to fall.

[Solauren]

Hmm, I wasn't expecting another issue like this for another week. It appears to be happening faster then I would have expected.

Or Traffic use is higher then I was expecting. I was expecting Twitter to have lower then normal use around Christmas and new years, and then pick back up after the first week of January had finished, and then outages and crashes to start as use jumped up.

Especially if people that were still with Twitter had found jumps over the holidays and started to leave.

(Shrugs)

[bilateralrope]

Twitter’s ‘Cost Cutting By Not Paying Bills’ Now Going To Increase Legal Fees

from the how-to-destroy-a-company dept
Wed, Jan 4th 2023 10:52am - Mike Masnick


It’s no secret that Elon Musk is desperately trying to cut costs at Twitter, the company he overpaid for and saddled with approximately an extra billion dollars a year in interest payments by leveraging the buyout. He’s cut staff somewhere around 75% and we still keep hearing rumors of further cuts. He’s turning off data centers as well. Though, as part of all this, he’s also driven away a huge percentage of Twitter’s revenue, as well as any sort of momentum towards growth.

A month ago, the NY Times noted that one of Musk’s cost savings techniques appeared to be to just stop paying Twitter’s bills.

To cut costs, Twitter has not paid rent for its San Francisco headquarters or any of its global offices for weeks, three people close to the company said. Twitter has also refused to pay a $197,725 bill for private charter flights made the week of Mr. Musk’s takeover, according to a copy of a lawsuit filed in New Hampshire District Court and obtained by The New York Times.

There are also a bunch of other stories about not paying law firms and a variety of other vendors as well. Last week there were more details on the “data center closure” order from Musk which, as we had heard rumored, was done haphazardly with little advance planning or care.

Elon Musk’s orders were clear: Close the data center.

Early on Christmas Eve, members of the billionaire’s staff flew to Sacramento — the site of one of Twitter’s three main computing storage facilities — to disconnect servers that had kept the social network running smoothly. Some employees were worried that losing those servers could cause problems, but saving money was the priority, according to two people who were familiar with the move but not authorized to talk about it.

Of course, for most people, not paying your bills is not seen as a “cost cutting” move, it’s called ruining your credit and risking all sorts of downstream problems. I guess when you’re filthy stinking rich (even if you’ve lost more money than anyone ever in history), it’s called “renegotiating.”

But I do wonder if this kind of “cost cutting” may come with a lot more additional costs than someone like Musk has realized. We’ve already talked about the very real threats from the FTC and the EU cracking down on Twitter for violating various laws and agreements. Those can come with massive fines.

But also, all this “cost cutting by not paying the bills” seems to be turning into lawsuits. Twitter is closing down its offices in Seattle entirely, as it’s facing eviction for not paying rent. The few remaining employees were apparently told to work from home, which is at least mildly amusing coming less than two months after Musk gave everyone an ultimatum to return to the office immediately.

But now there’s at least one landlord who is suing. Columbia REIT, which manages 650 California in San Francisco, is suing the company for unpaid rent. This is not Twitter’s headquarters (where it’s also been reported the company is not paying rent) at 1355 Market Street. Rather this was some office space that Twitter took over when it purchased mobile advertising tech firm CrossInstall in 2020. That deal came with the lease on CrossInstall’s offices at 650 California St. Rather than actually use the space, Twitter apparently has been subletting it out to Dentsu, but Twitter is still responsible for the rent.

From the documents, it appears that Dentsu pays Twitter slightly less than what Twitter has to pay the REIT for the space. So, based on this, it is possible that not only is Twitter not paying the rent, which may screw over Dentsu, but it may be taking the money from Dentsu in the meantime.

Still, I imagine these types of lawsuits are going to start to add up, and the legal bills associated with them may start to be even more costly than, you know, paying for the basic things Twitter promised to pay for. Musk may think he can get away with that by also not paying the lawyers, but there are few professions I know of that get more pissed off about being stiffed on bills than lawyers.

He’s Elon Musk, so maybe he’ll get out of all of this as well, but it still strikes me that there was always a less costly way to do this: don’t immediately fire everyone, spend some time figuring out where you can cut costs, put in place some real effort to retain existing revenue, and then work on ways to renegotiate other contracts while still paying your bills.

Otherwise, this “just not paying any bills” and having to sort it out in court almost feels like a non-bankruptcy bankruptcy, but without any of the protections and orderly process of an actual bankruptcy. It seems like a ridiculously costly way to “cut costs.”

Looks like Musk is finding out that you can't cut costs by simply refusing to pay all your bills.

[Straha]

From Matt Levine's newsletter today:

To be fair, sometimes private-market valuations do go down. For instance a lot of big private companies have public mutual funds as investors, and those funds periodically report the carrying value of their private stakes, and they are a bit more aggressive about marking them down.[6] Here is a fun little valuation puzzle:

Fidelity slashed its carrying value of Twitter by 56% during the first month of Elon Musk's ownership, according to a new disclosure.

Driving the news: Fidelity was among the group of outside investors that helped Musk finance his $44 billion takeover of the social media site, by purchasing equity. ...

Fidelity's Contrafund valued its Twitter shares at $53.47 million on Oct. 31, which was just days after Musk's deal closed. It then revalued the shares at around $23.46 million as of Nov. 30, representing a 56% decline.

Let’s say you are in charge of marking Fidelity’s illiquid private investments to market. What do you know about the value of your Twitter stake?

1. You know that Musk paid about $44 billion for Twitter in October, and some of your funds went in on the deal with him.
2. You know that, at the time, Musk said he was “obviously overpaying” for Twitter.
3. You know that, since Musk agreed to pay $44 billion for Twitter, tech stocks have broadly sold off.
4. You know that Twitter has been chaotic under Musk and has missed revenue targets.
5. You know that Musk keeps talking about Twitter going bankrupt, though to be fair he has recently said that it is “not, like, in the fast lane to bankruptcy anymore.”
6. You know that Twitter’s debt is down something like 40%, implying that the stock has fallen by even more than that.
7. You know that Twitter has ... stopped paying rent? Seems bad.
8. But! You also know that in December Musk was trying to sell more stock at the original $44 billion valuation, and possibly getting encouraging feedback on that offering. “Over recent weeks we’ve received numerous inbound requests to invest in Twitter,” Musk’s money manager told investors. “Accordingly, we are pleased to announce a follow-on equity offering for common shares at the original price and terms, targeting a year-end close.”

Really all of the evidence points to marking down your Twitter stake by at least 56%, except that last point. If Twitter was a public company, you would just mark your stake to the last trading price of the stock; everything else — fundamental analysis, the trading prices of comparable companies, the chief executive officer talking incessantly about bankruptcy — would be irrelevant to your valuation. But Twitter is not a public company. If it prints a trade at the same $44 billion valuation — if Musk finds some of his fans or supporters or co-investors or “randos” who are willing to put in money at a price that even Musk thinks is ridiculous — then does that mean it’s still worth $44 billion? Or does Fidelity have to look past that and say, no, that trade isn’t a real indication of value?

This is all hypothetical, though; the last I heard about Musk’s efforts to sell more stock was in mid-December. Elsewhere, here is a very good summary of Twitter’s financial situation and capital structure; a sample:

There were media reports that the 1st lien term loan was bid at 60 cents on the dollar. Using rough math, 40 points over seven years equates into 5.75% of additional spread-to-maturity. If it traded at 60 cents, the 1st lien term loan would yield 15%.

If the 1st lien trades at 15%, its not unreasonable to think the unsecured tranche would trade with yields in the low-20% context. Given the interest rate is capped at 12% on the unsecured debt, it would need to trade near 20 cents on the dollar to trade at 22%.

It is difficult to inject equity into the capital structure with the debt theoretically distressed.

It has been reported Twitter is seeking new equity at the previous $54.20 price. Colonizing Mars seems easier.

[bilateralrope]

Twitter said it fixed ‘verification.’ So I impersonated a senator (again).

Elon Musk said Twitter would begin authenticating users who pay $8 for Blue. Our tech columnist was still able to get a checkmark for an impostor Sen. Ed Markey.

Perspective by Geoffrey A. Fowler

Updated January 5, 2023 at 10:23 a.m. EST|Published January 5, 2023 at 6:00 a.m. EST

Elon Musk said he would fix Twitter’s problem with impostors. The blue check mark on my fake U.S. senator suggests he still has a long way to go.

On Tuesday, @SenatorEdMarkey briefly went viral on Twitter. Gisele Barreto Fetterman, the wife of Sen. John Fetterman (D-Pa.), thanked @SenatorEdMarkey in a tweet that garnered 140,000 views.

The problem is, @SenatorEdMarkey is actually me, not the real Sen. Edward J. Markey. It’s a test of Twitter’s $7.99 per month Blue “verification” service I made with the permission of the real Democrat from Massachusetts. I wouldn’t blame anyone for being confused: My test account has the senator’s name and photo and a blue check mark that says it is “verified.”

But Twitter, it seems, isn’t verifying much of anything.

This is the second time I’ve been able to impersonate the senator. Back in November, when Twitter first began selling its iconic blue check marks to anyone for a fee, I showed how easy it was to buy official-looking status with an impostor account called @realEdMarkey. Musk, who bought Twitter in October, got into a Twitter fight with Markey about it. Then Musk shut down Blue and promised that in a new-and-improved version “all verified accounts will be manually authenticated” before they’re given the authority of a check mark.

Elon Musk
@elonmusk
·
Follow
Sorry for the delay, we’re tentatively launching Verified on Friday next week.

Gold check for companies, grey check for government, blue for individuals (celebrity or not) and all verified accounts will be manually authenticated before check activates.

Painful, but necessary.

After Blue 2.0 (my term for it) launched on Dec. 12, I made another faux Markey and applied for verification. Some of Twitter’s new requirements slowed down the process — and might dissuade some impatient impersonators — but the company never asked to see a form of identification. Last week, up popped a blue check mark on my @SenatorEdMarkey account. Oops! I did it again.

Twitter didn’t reply to a request for comment. After I published this story, Twitter suspended the @SenatorEdMarkey account.

Two months into Musk’s takeover, millions of Twitter users face a real question: Is Twitter getting better or worse? Is it even worth putting our time into Twitter anymore, or should we abandon ship for something else, be it Mastodon, Instagram or TikTok?

Twitter has yet to devolve back into the impersonation circus we saw when Blue first launched. But my test shows Twitter does not understand the dangers of misinformation or the value of authenticated sources. Under Musk’s leadership, Twitter users face a greater risk of seeing something fake and thinking it is real. I don’t know if Twitter is going to die any time soon, but I’m spending less time on a service I can’t trust.

How I bypassed verification again

Creating my impostor senator the first time around was dead simple. All I needed was a new Twitter account running on an iPhone and a credit card to pay for Blue.

For Blue 2.0, Twitter added two additional hurdles that could help slow people and bots from making fakes. To test it, I needed a Twitter account that was at least 90 days old — new accounts are not eligible. A colleague had one he hadn’t used in years, so he dedicated it to the cause. After we changed the name of the account to @SenatorEdMarkey, Twitter made us wait 7 days before we could sign up for Blue.

Second, I also had to link the account to a phone number before I could sign up for Blue. To do that, I visited the T-Mobile store at the mall, and got a 1-month temporary number for $15 — no name or ID required.

Once I had all of those pieces in place, I signed up for Twitter Blue on the web, paying with a credit card. At that point, I expected Twitter would ask me to prove my identity, such as uploading a snapshot of a drivers’ license. I thought Twitter might be suspicious that the account was owned by a random Gmail address, not one ending in senate.gov. I assumed its verification system might challenge me after scanning for the word “senator” or maybe even the names of the notable people with legacy verification status.

But no. After 7 days, a blue check mark appeared on the faux Markey account, no questions asked.

As far as I can tell, Twitter has never said what goes into “manually authenticating” an account. Since Musk bought Twitter, the company also now has a greatly reduced workforce — so it’s not clear who’d be around to do the checking.

Twitter says impersonating others is not allowed, and accounts that do so face suspension when they’re discovered. But in 2023, it’s not enough to just make a rule. Twitter has to do something to actively stop it from happening — and its Blue adaptations clearly aren’t enough. Across the internet, authentication is becoming increasingly common. Airbnb asks you snap a photo of your ID to rent a room; Facebook asks for an ID to gain access to hacked accounts.

Musk often tries to frame criticisms as culture wars — but evaluating how well a product’s core functions work isn’t a partisan act. It’s a tech review, and I do it with the same critical eye to new Apple iPhones, Amazon shopping results and Twitter check marks. I take the side of users, and last week published a column agreeing with Musk about the need to stop a form of online censorship called “shadowbanning.”

Why trust matters

Musk appears to have several goals in selling Blue subscriptions. First, he needs a new source of revenue after taking on billions in debt to buy Twitter. Second, he wants a mechanism to separate real users from bots, whose creators are less likely to pay for a subscription. Finally, he has said that offering verified status to more users will level the playing field, encouraging more people with wider views to be active on Twitter.

It’s possible that people who buy blue check marks will tweet more. But without actually doing the hard work to authenticate them, Twitter is eroding one thing that helped make it into a cultural juggernaut: You could trust it. Its legacy verification system — in which the company really did check who owned an account — was opaque, but it meant when an elected official, company or celebrity tweeted, you’d believe it was them.

The real Markey, who has long been a critic of Big Tech, told me Twitter had failed a basic test. “It’s an absolute joke that Elon Musk, who prides himself on being a tech entrepreneur, can’t implement a functioning verification regime — except users aren’t laughing,” Markey said.

“Twitter’s current leadership has failed to safeguard the platform from misinformation, failed to provide answers to my simple questions regarding their anti-fraud protocols, and failed to demonstrate an appreciation for the role that their platform plays in our democracy,” he said.

In a partial return to Twitter’s old system, Twitter has said it plans to offer different-colored verification marks for officials and corporations separate from its Blue services. That isn’t going to help independent creators, but Twitter did give The Washington Post’s account a gold check mark for businesses, and President Biden’s account a gray one.

And so far, Twitter has not given any special marks to the accounts belonging to U.S. senators such as Markey.

As of press time, Markey’s real account still has a blue check mark that says, “This is a legacy verified account. It may or may not be notable.” My fake one, meanwhile, says “This account is verified because it’s subscribed to Twitter Blue.”

There is a difference and it matters to Twitter’s users — and its future.

It sounds like the only reason to pay for the blue subscription is if you want to impersonate someone who already had a blue checkmark. But, the more people who do pay to impersonate, the more they erode the value of the blue checkmark for everyone.

Really, what did Musk think would happen if he didn't have anyone verifying the subscribers ?

[Ralin]

Really, what did Musk think would happen if he didn't have anyone verifying the subscribers ?

That people wouldn't pay money just to troll on the internet.

[Solauren]

Really, what did Musk think would happen if he didn't have anyone verifying the subscribers ?

That people wouldn't pay money just to troll on the internet.

If he believes that, I have doubts that Musk even looks around on the internet beyond Googling himself and twitter posting.

[Straha]

He didn't think people wouldn't do that.

He thought that was a solvable problem with a little bit of techno-engineering and an easy way to play to the masses. He was right on one part of that, wrong on the rest, and didn't understand that it broke the pitch of twitter to its real clients.

[Solauren]

He didn't think people wouldn't do that.

He thought that was a solvable problem with a little bit of techno-engineering and an easy way to play to the masses. He was right on one part of that, wrong on the rest, and didn't understand that it broke the pitch of twitter to its real clients.

Ironically, the way the reporter thought they'd verify identification would have been enough to stop most people. (Scan of drivers license)
Make a deal with various governments to be able to send information to them to verify identity, and it would stop just about everyone that wanted it just to troll.

i.e
Someone selects "I am submitting a drivers license", and then selects where it's from (US, California).
They then submits scan of their california drivers license and type the information on it in a form.
Twitter sends that automatically to California's DMV
If it matches what California has it it's database, it comes back 'confirmed'. If it's confirmed, they get the blue check mark. If it's invalid, they do not, (and the account gets suspended.)

[bilateralrope]

A group of laid off Twitter employees finally got paltry severance agreements. Now they must decide whether to sign, or pursue legal action against Elon Musk's company.

Kali Hays Jan 8, 2023, 9:10 AM

• After two months of waiting, laid off Twitter employees got severance agreements from Elon Musk.
• The process for accessing the agreements was so odd, many workers feared a phishing attempt.
• Some affected workers say they will not sign because of how much they are being asked to give up.

Hundreds of Twitter employees who were part of Elon Musk's first round of layoffs just got severance paperwork after waiting for two months. Now they must decide whether to sign or join lawsuits against the company and its billionaire owner.

In the early hours of Saturday, the former Twitter employees laid off on Nov. 4 received a message from "twitterseparation@cptgroup.com," an email not associated with any internal department at the company, several people familiar with the situation told Insider.

The email was designated as "spam" for most people who received it. After digging it out of spam folders, the message directed people to a website operated by CPT Group for access to the full separation agreement.

"As you know, we've had to reduce our global workforce to ensure the company's success moving forward, and your employment has been impacted," the website stated. "Since we notified you of your status, you've remained in non-working notice, employed and on payroll, and this will continue through your separation date. You are also eligible to receive additional severance if you sign a separation agreement and release."

'Imagine waiting so long and then getting this'

Even before laid off workers received their agreements, many were discussing whether or not to sign away their rights in return for one month of severance. By comparison, laid off workers at Facebook received six months of severance when that company enacted mass layoffs in November. Snap offered its workers four months of severance in its late August layoffs.

One person who received an agreement said they'd decided not to sign, and instead will participate in one of the several lawsuits already filed or in the works related to Musk's alleged violations of the merger agreement regarding employee benefits and severance. Scores of other affected employees have already signed on to participate in legal actions. The person noted that, had the agreements come sooner, perhaps they and other people would have been more inclined to sign.

"Imagine waiting so long and then getting this," the person said. This person, and others who spoke with Insider, asked not to be identified discussing private matters. A representative of Twitter did not respond to a request for comment.

'This is sketchy AF'

Everything from the text spacing of the email to it redirecting to a website no one was familiar with put former employees on guard. "This is sketchy AF," one person wrote in a message. Another person noted that the long wait for severance paperwork has left many people "prime targets" for phishing attempts.

Still, two people familiar with Twitter's actions said the site is legitimate and noted that this will be the way all severance or separation agreements will be distributed by Twitter. The website also uses Twitter's official blue and white bird logo and the official separation agreements are said to show Musk's signature.

Workers who were either laid off or resigned around November 4 are expecting to receive separation agreements, two people familiar with the company said. However, those who resigned a few weeks later over Musk's "hardcore Twitter 2.0" email have not received an agreement to sign so far, the sources said.

As for the separation agreements, they appear to be mostly boilerplate, offering one month of pay to laid off employees as severance. On November 4, Musk tweeted that "everyone exited" was offered 3 months of severance, saying that was 50% more than legally required. The tech billionaire may have been conflating periods of "non-working" employment that later saw thousands of workers continue to be paid since November, while they waited for severance. State labor laws require companies to give certain notice periods for mass layoffs.

In order to receive the one month of additional pay, laid off workers must sign the contract being offered, which prohibits them from participating in any lawsuit or mass arbitration against the company, or speaking publicly or to the press about Twitter. Such clauses are typical for severance agreements. However, the agreements also call for former employees to forfeit any future stock payouts or payment of bonuses they may have been entitled to.

"Let the lawsuits begin," another person who received a separation agreement and is not signing it said.

As for what's in the agreements, Here's a Twitter thread about them

Twitter workers, many of whom I represent, were FINALLY given their "severance agreements" on Saturday.

They are really settlement agreements which SILENCE WORKERS FOR LIFE and and require them to give up important legal rights.

Let's discuss. 1/

First, any worker who wants to bring a claim, for Twitter's broken promises, discrimination, fraud etc. (the claims we are filing), SIGNS AWAY THE RIGHT TO SUE FOREVER under this agreement.

No lawsuit, no arbitration if you sign.

So it's really a settlement agreement. 2/

Under this agreement workers promise not to provide assistance or cooperation to ANYONE with a dispute against Twitter.

If you were a victim of age discrimination, e.g., and are willing to provide truthful info to another victim -- you CAN'T if you sign. Ever. For life.

3/

Attorneys like me for employees are often out there begging folks to just give us truthful information to help our underdog clients. This restriction will severely hamper efforts for workers to get justice against Twitter.

Why is this company so afraid of the truth?

4/

At the same time, workers who sign Twitter's severance agreement promise to assist Twitter in any lawsuit or investigation.

So workers can help Twitter, but not their former colleagues. Again, for LIFE.

Elon Musk, free speech guy, allows workers to speak only to one side.
5/

And the coup de grace: Twitter workers who sign the agreement promise nondisparagement: they may not say anything negative about Twitter, nor its management, nor Elon.

EVER.

FOR LIFE.

No wonder so many folks are reaching out to me about rejecting this and filing claims.

6/

Every worker can decide what's best for them, but many are rejecting these obnoxious terms.

Good summary of what's happening here.

My DMs are open. We are happy to talk to tweeps for free and confidentially, and have an informational Zoom 2pm PT today.

That's a lot to give up for a severance amount that is less than what Musk claimed he was going to give them. Less than the 60 days required by law. The fact that some former Twitter employees are choosing lawsuits instead of signing shouldn't surprise anyone, but it probably surprises Musk.

[Solauren]

So nice of Musk to provide the people suing him with more evidence...

[bilateralrope]

Germany reminds Musk that removing disinformation from Twitter is a must

Germany will continue "critically" monitoring Twitter for disinformation.
ASHLEY BELANGER - 1/7/2023, 9:28 AM

Twitter CEO Elon Musk continues to deal with intense scrutiny of how his social media platform will fight disinformation with its reduced staff. Early in 2023, Musk met with Germany's digital minister, Volker Wissing, in California to discuss whether Twitter would “voluntarily comply” with an agreement Twitter previously made with the European Commission to combat disinformation.

A ministry spokesperson described the meeting as “a very open and long talk” that ended with Musk assuring Wissing that Twitter wouldn’t back down from the disinformation fight. Politico reported in December that part of Twitter’s agreement with the commission involves preventing users from profiting from misinformation, labeling political ads, and making data available to researchers.

Ars could not immediately reach Twitter for comment. A ministry spokesperson told Ars that "in his talks with Elon Musk, Federal Minister Wissing made it clear, among other things, that Germany expects the existing voluntary commitments against disinformation and the rules of the Digital Services Act to be observed in the future."

The DSA was implemented in November, designed to “ensure that the online environment remains a safe space,” while “safeguarding freedom of expression.” The European law targets major social networks for compliance first, noting that they have “greater responsibility” to protect users from risks like “dangerous disinformation.” Twitter and other “very large online platforms” have until mid-June 2023 to comply fully with the law. Unlike the voluntary agreement that Twitter made with the commission, a ministry spokesperson told Ars that "like any company, Twitter must in future comply with the rules of the Digital Services Act. There are no exceptions here."

"With the Digital Services Act, we have set clear rules at EU level to take action against illegal content, increasing disinformation, and bots in social networks," the ministry's spokesperson told Ars. "Companies are held accountable here so that users can use the networks safely."

Over the next few months, the German government will be "critically" watching Twitter, the ministry spokesperson said.

The ministry did not share any comments that Musk made in the meeting but said that Musk made the meeting on very short notice—only confirming the evening before it was scheduled.

Musk has been criticized in the past few months for his personal use of Twitter—tweeting conspiracy theories from his account—as well as official decisions he's made as Twitter CEO, like eliminating Twitter’s COVID-19 misinformation policy. In the last few days, trust and safety issues continued to plague the platform. This week, a Washington Post reporter confirmed that Twitter’s revised authentication process for Twitter Blue subscribers still does not prevent impersonation, and Vice reported that Twitter amplified an “obviously fake tweet” about vaccines, resulting in a targeted harassment campaign against a doctor.

Back in November, the European Commission’s Internal Market commissioner, Thierry Breton, told Musk that Twitter had “huge work ahead” to effectively tackle disinformation, Politico reported.

When 2023 started, one of the first changes Twitter made, however, could potentially result in more misinformation spreading on the platform. Earlier this week, Twitter lifted a political ad ban designed to stop misinformation spread and announced a plan to stop limiting the reach of “cause-based” tweets.

And Musk has continued to draw criticism for his personal tweets. Musk recently responded to a tweet that Politifact has since debunked for relying on “faulty data to claim cardiac arrests are increasing in athletes” who received the COVID-19 vaccine. The Washington Post reported that the tweet was posted amid “COVID misinformation spikes” seen across Twitter after Buffalo Bills football player Damar Hamlin collapsed on the field mid-game on Monday. Twitter's official response to this misinformation spread seems lacking. There are currently no community notes on the tweet Musk responded to, which would normally help alert users to the seeming misinformation. Instead, Musk seems to personally validate the tweet, saying the information was “certainly worth further investigation.”

It sounds like Germany is preparing to make an example of Twitter. A reminder to everyone that, if you do business in the EU, you must comply with EU law. Unless Twitter goes dark first.