Last month, Tesla’s CEO Elon Musk finally completed the acquisition of Twitter ending months of uncertainty. However, the deal, which was controversial at the onset itself, continues to face controversies even after the closure.
Musk, who now calls himself “Chief Twit” has laid off nearly half of Twitter’s employees. To be sure, there has been a flurry of layoffs at tech companies over the last couple of months. Things have been even bleak for social media companies like Snap and Meta Platforms as they grapple with a weak ad market.
However, it is the manner of the layoffs at Twitter which have led to the controversy. Twitter informed employees through email that they would receive an email on their official email ids if their employment was intact.
Others whose employment was “impacted” were to receive an email on their personal ids. Also, while Musk has said that the company has given severance pay of three months to the employees, it did not apparently follow the guidelines and issued a WARN (Worker Adjustment and Retraining Notification) notice.
Under the WARN Act, companies need to give advance notice before mass layoffs or plant closures. Some Twitter employees have sued the company in a San Francisco Federal court.
The complaint says, “Plaintiffs file this action seeking to ensure that Twitter comply with the law and provide the requisite notice or severance payment in connection with the anticipated layoffs.”
Musk Faces Yet Another Controversy over Twitter Acquisition
Meanwhile, after Musk took over Twitter, several leading personalities quit the social media network. Also, a lot of advertisers, especially in the automotive industry, paused their ad spending on Twitter. General Motors, Audi, United Airlines, and General Mills are among the companies that have paused ads on Twitter.
Notably, Tesla is no more a niche automaker and with expected deliveries of around 1.4 million this year, it is in the league of major automakers. Tesla competes with legacy automakers like Ford, General Motors, and Volkswagen as they ramp up their EV (electric vehicle) production.
Also, a lot of companies are worried about an increase in hate speech on Twitter following Musk’s takeover. There are already signs that hate speech is on the rise on the microblogging site. Even Musk shared a now-deleted unfounded anti-LGBTQ conspiracy theory over the Paul Pelosi attack.
Many have been critical of Musk over the proposal to charge $8 for the verified blue tick.
Twitter is Facing the Heat as Advertisers Pull Back
Twitter is meanwhile facing the heat as advertisers pull back from the platform. Musk tweeted, “Twitter has had a massive drop in revenue, due to activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists.”
He did not however specify the revenue drop. Musk also said activists are “trying to destroy free speech in America.” The world’s richest person calls himself a “free speech absolutist” even as his public record does not conform to that.
Musk has also tried to justify the layoffs and said that they were necessary as the company was losing $4 million every day.
Would Biden Administration Investigate Musk’s Acquisition?
Musk hasn’t shared a good rapport with President Joe Biden. Biden shunned Musk and instead invited chiefs of Ford and General Motors to discuss scaling up EV production in the country.
Musk has also been critical of Biden and has been warming up to the Republicans. He has also vowed to vote a Republican in 2024 and also offered to restore Donald Trump’s Twitter account.
Trump meanwhile turned down the offer. Notably, the former President has also launched his own social media platform called Truth Social, which has announced a merger with Digital World Acquisition Corp. (NYSE: DWAC). We have a guide on how to buy DWAC stock before it merges with Trump’s TMTG (Trump Media & Technology Group).
Some of the Democrats now want the Biden administration to investigate the transaction.
Musk’s Twitter Acquisition Was Always Controversial
Musk’s Twitter acquisition has been controversial from the onset. The billionaire took a massive stake in Twitter in March but disclosed it quite late, inviting SEC scrutiny. He subsequently declined a board seat on Twitter, raising speculation of a buyout.
Musk eventually made an offer to buy Twitter for $54.20 per share, which was a significant premium over the prevailing price. Twitter’s board initially opposed his offer and even introduced a poison pill. The board finally agreed to his proposal.
Musk however had second thoughts and put the deal on hold. He alleged that the fake accounts on the platform are quite higher than the 5% that Twitter claims. Musk walked out of the deal, post which Twitter sued the company.
However, known for his about-turns, Musk eventually agreed to buy Twitter at the original terms. He emphasized said that the deal is contingent on ending the legal battle.
Dogecoin Surged after Musk Confirmed the Acquisition
Dogecoin meanwhile surged after Musk agreed to buy Twitter. As the self-proclaimed dogefather, Musk is among the biggest backers of the meme cryptocurrency. We have a guide on how beginners can buy dogecoin.
While the meme stock mania has faded, there is still interest in meme cryptos. Dash 2 Trade is also gaining traction and is among the most traded meme tokens.
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