Elon Musk Controls the Largest Public Opinion-Forming Platforms, While Mass Layoffs Shake Tech Companies

At a time when tech companies are facing many challenges and intractable pressures as a result of high inflation, Meta, the parent company of Facebook, WhatsApp, and Instagram, intends to lay off thousands of employees starting this week, following the example of several companies, which prompted tech executives to warn of the difficult stage ahead.

Since the first hours of Elon Musk's control of Twitter in a deal worth $44 billion, he took strict measures, including firing half of the employees, then communicating with some of them, in addition to charging users, which provided some early indications of how the world's richest person is restructuring the largest public opinion-forming platforms.

 

Chaos and Confusion

Twitter has already begun firing its employees, after a week of chaos and uncertainty over the company's future under new owner Elon Musk, who justified his decision that the platform is witnessing a massive decline in revenue in light of advertisers withdrawing their funding.

The company has been silent about the extent of the layoffs, although internal plans seen by Reuters this week indicate that Musk is looking to lay off about 3,700 Twitter employees, about half of the company's workforce, as he seeks to cut costs and impose new business rules.

Musk said in a tweet on November 5, 2022, that "Twitter had no other choice but to reduce the number of its employees, and it was losing more than $4 million a day."

However, Musk refrained from signing a layoff of thousands of Twitter workers in his name, and merely wrote "Thank you, Twitter," in messages sent to the employees' personal email addresses, Business Insider reported on November 5, 2022.

Musk's decision not to sign the memo may not come as a surprise, as since the deal to buy the social media company was completed, he has avoided calling himself CEO, writing only Chief Twit.

Management experts say Musk's dry approach to layoffs could hurt the company in the long run.

The new changes to Twitter prompted the United Nations to express its concern, as the United Nations High Commissioner for Human Rights, Volker Turk, sent an open letter to Musk, urging him to ensure that human rights are fundamental to Twitter's management.

In this context, the New York Times predicted that Musk's influence would increase after his acquisition of Twitter, and multiply the influence on the platform's content management, and it is possible that it will fall hostage to the views of the SpaceX owner, which is difficult to separate from his own economic interests.

In a sign of more confusion after Musk took over, Twitter is now communicating with dozens of employees who have lost their jobs, asking them to return, Bloomberg reported on November 6, 2022.

The agency reported that some of those who were asked to return were dismissed by mistake.

It reported citing people familiar with the moves, "others were abandoned before management realized that their expertise might be necessary to achieve the new features that Musk was seeking."

 

Global Wave of Layoffs

Twitter was not the only company that made a decision to lay off about half of its 7,500 employees over the past days, as it was preceded and accompanied by many other companies operating in the global information technology industry.

The current year witnessed a massive global wave of layoffs for thousands of employees in various sectors due to the slowdown in the economy caused by the supply chain crisis after the exit from the Coronavirus crisis, and the Russian–Ukrainian war, which directly affected vital economic sectors, according to a Business Insider report on November 5.

As a result, tech companies have stalled hiring wheels as they grapple with sluggish consumer spending, rising interest rates, and global economic uncertainty.

According to Crunchbase News, as of late October, more than 45,000 workers in the US tech sector have been laid off in deep job cuts so far in 2022.

The names include technology companies big and small, with many on the list who have seen unprecedented growth during the pandemic due to a boom in online spending.

The Wall Street Journal newspaper said, on October 6, 2022, that Meta company is preparing to start large-scale layoffs this week.

The newspaper revealed the plan of Meta, which employs about 87,000 employees around the world, according to September 30 figures, quoting people familiar with the matter, saying that the layoffs could include 12,000 employees, and the announcement is scheduled to come as soon as possible.

On November 3, 2022, two groups in Silicon Valley: Stripe, which provides financial services and programs, and Lyft, which specializes in transporting passengers, announced the layoffs of a large number of their employees, with a rate ranging between 13% and 14%.

Chime, a US fintech company, has fired 12% of its staff, while Snapchat shed 20% of its workforce, and Amazon, which employs about 1.54 million employees, froze hiring for several months.

Cryptocurrency exchange operator Coinbase Global has laid off 18% of its 3,700 employees this summer, and trading company Robinhood Market has cut 9% of its staff.

Hard disk maker Seagate Technology announced last month that it plans to cut 8% of its global workforce, or about 3,000 employees, due to economic uncertainty and declining demand for its parts, the News18 website reported on November 07, 2022.

Intel also recently said the company is cutting jobs and slowing spending on new factories in an effort to save $3 billion next year, and according to Bloomberg, about 20% of employees will be laid off.

Microsoft has also recently laid off about 1,000 employees across multiple departments, and Apple laid off about 100 contract hiring companies last August.

For several years, Netflix has been an unstoppable growth machine, but 2022 has been tough for the company, with Netflix seeing two rounds of job cuts this year, the first in May and the second in June, and in total, the company laid off about 500 employees.

The global digital brokerage platform Robinhood has cut 9% of its entire staff.

Last July, Shopify CEO Tobias Lutke announced that the company would lay off 10% of its nearly 1,000 workers, knowing that Shopify had significantly benefited from the e-commerce boom during the Coronavirus pandemic.

 

Bleak Future

The grim news of layoffs at many large tech companies came in parallel with the Federal Reserve's once again raising of interest rates to combat inflation, signaling greater risks that the US economy is sliding into recession.

In turn, Dr. Yahya Sayed Omar, a researcher in political economy, explained in a statement to Al-Estiklal that "the goals and objectives of companies are directly affected by the general trend of the economies of countries and the global economy, in light of the economic crises that the world is suffering from, the impact of these crises has shifted to companies, and the demand for their products has declined, which is what led most companies to reduce their expenses with a decline in their revenues."

He added, "Global inflation has severely affected the performance of various companies, which is what caused the layoffs in some companies, and the freezing of employment in others."

As for the reasons for laying off employees, Dr. Sayed Omar explained that "it is due to several points, including global inflation, the rise in production costs, and the decrease in demand as a result of a decrease in the purchasing power of individuals, companies and governments alike, in addition to fears of the global recession that affected the growth opportunities of companies, which prompted them to reduce their expenses by reducing the number of employees."

With regard to the sectors most affected, the researcher indicated that "the technology sector may be the least affected, as it is one of the sectors characterized by low employment, and the production inputs in it from raw or semi-manufactured materials are relatively low, while the physical production sectors will be affected more."

As for the impact of raising the US interest rate on international companies, Dr. Sayed Omar stressed that "it will certainly affect those companies, especially as it raised the cost of borrowing, which hindered the possibility of expansion, or borrowing to finance the production process."

Dr. Syed Omar concluded that "the global economy is currently suffering from a severe inflation crisis, and in order to treat it, many central banks in the world have raised the interest rate as a treatment tool, but raising the interest rate will raise the prospects of a global recession, especially since it was accompanied by a crisis in the supply chains, and the economic repercussions of the war in Ukraine, so under these circumstances, the prospects of a global economic recession are high."