With the purchase price of 44 billion dollars, Elon Musk is dependent on Twitter making more money – but big advertisers are waiting. Meanwhile, thousands of employees could lose their jobs on Friday.

New Twitter owner Elon Musk is complaining about a slump in sales after major companies suspended advertising on the online service. On Friday, the Volkswagen Group joined other advertisers who want to freeze ads on Twitter. Musk spoke of a “massive drop in sales”. Advertising makes up almost all of Twitter’s business. For most advertisers, however, other platforms such as Facebook are more important.

Musk blamed “activist groups” who put pressure on advertisers for the unspecified drop in sales. Nothing has changed when it comes to handling controversial content on the platform, and everything has been done to please these activists, Musk wrote on Twitter. “They are trying to destroy free speech in America,” he claimed, without naming the groups.

No final advertising stop

VW cited the announcement of the short message service to revise content guidelines as the reason. The VW Group “recommended its brands to pause their paid activities on the platform until further notice,” it said. This is not a definitive stop to advertising: “We are monitoring the situation closely and will decide on the next steps depending on how things develop.” The Tesla and SpaceX boss completed the purchase of the social network for around $44 billion last week.

Musk raised concerns himself with constant criticism that Twitter restricts freedom of speech too much. In an open letter to advertisers last week, he promised that not everyone would be allowed to express everything on Twitter without consequences. Then, over the weekend, he himself posted a link to an unsubstantiated conspiracy theory about the attack on Paul Pelosi, the husband of US House Speaker Nancy Pelosi.

Twitter in the red

There is also resistance from users against his plans to offer the coveted hook for verified accounts as part of a paid subscription. Musk wrote: “To all the whiners, please keep complaining, but it’s $8.” In addition, subscribers should only see half of the usual advertisements. On Twitter, advertisements are played to the users as “paid tweets” in the timeline.

A permanent withdrawal of major advertisers would be a problem for Musk. The service recently wrote red numbers. Musk had also taken out loans of around 13 billion dollars for the takeover – and according to media reports, servicing them requires more money than the Twitter business generates in free funds. Shrinking revenues would be particularly inconvenient.

Last week, General Motors had already announced that it would at least suspend its advertising activities on the platform. The pharmaceutical company Pfizer and the food giants Mondelez and General Mills are said to have taken similar steps.

Possibly even more threatening for Twitter’s advertising business, which accounts for around 90 percent of sales: the large international advertising groups are also keeping their distance. The industry giant IPG, which manages billions in advertising budgets for companies such as Coca-Cola, American Express, Levi Strauss and Spotify, is said to have advised customers to stop advertising on Twitter just a few days after Musk’s takeover. “It is not yet clear where Elon Musk stands,” said the founder of the world’s largest advertising holding company WPP, Martin Sorrell, this week with a view to future Twitter guidelines. So companies waited. “Customers don’t want conflict, they don’t want controversy.” VW, for example, has been paying more attention to the surroundings of its online advertising for some time.

“Please return home”

Twitter employees were due to receive an email on Friday if they were still working at the online service after the takeover. According to media reports, around half of the 3,700 jobs could be lost. The offices would remain closed on Friday and all access cards would be disabled, an email sent to employees said. “If you are in an office or on your way to an office, please return home.” The measure is intended to ensure the security of employees as well as the Twitter systems and user data.

The step is likely to be a precautionary measure to rule out any protest actions by those who have been laid off. That would not be unprecedented: In November 2017, on his last day on the job, an employee deactivated the Twitter account of then US President Donald Trump. It took about ten minutes for the profile to be back online.

The circular said the job cuts were “unfortunately necessary to ensure the company’s future success.” For Twitter employees, it was the first official communication since the purchase was completed, as reported by the Washington Post, among others.

A lawsuit was filed in San Francisco on Thursday on behalf of several employees, alleging that Twitter violated California labor laws by failing to communicate properly about the layoffs. The attorneys are seeking class action status.

Bloomberg to the Mail Complete circular mail on Twitter