The Washington PostDemocracy Dies in Darkness

Opinion How Elon Musk fired Twitter staff and broke nothing

The Twitter profile of Elon Musk. (AP Photo/Eric Risberg, File)
4 min

When Elon Musk said he was going to cut up to 75 percent of Twitter’s workforce last year, I was incredulous. “Layoffs of that magnitude mean critical operations running at half strength,” I pointed out. “It means accidentally firing the only person who knew how to perform some core business function.”

It was so over the top, so obviously irrational, that I could only view this as some Muskian fit of whimsy, soon to be revised under pressure from reality. And sure, in the end he only laid off half the staff, but … half the staff! Yet the site is still running.

Sure, there have been transient service issues, often accompanied by apocalyptic predictions (on Twitter) of the platform’s imminent demise. But if there has been an outflow of users (hard to say, now that Twitter is private), it seems to be driven by political objections to Musk, rather than a decline in the technical quality of service. Which raises a question: If Twitter can get by for three months on a fraction of its staff, how many of those folks were actually necessary?

That’s also a question for a lot of other tech firms, many of which have announced major layoffs.

Molly Roberts: What Elon Musk failed to understand about Twitter

In November, payments giant Stripe and Meta, Facebook’s parent, each announced they would let go 13 to 14 percent of their workforces. In January, both Amazon and Alphabet, the parent company of Google, announced cuts of roughly 6 percent. (Amazon founder Jeff Bezos personally owns The Washington Post.) The list goes on, filled with names you’ve heard: PayPal, Microsoft, Netflix, Roku, Wayfair, Salesforce.

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And this is happening in the context of a strong jobs market. The unemployment rate was 3.4 percent in January, with the economy adding a sizzling half a million jobs in a single month. Why, then, is one of our most dynamic sectors seemingly in such trouble?

Molly Roberts

counterpointTwitter was — and is — broken

Three answers, from least to most worrisome.

First, tech headcounts exploded during the pandemic and are now settling back to earth. Driven by spiking demand as the whole world headed indoors, Amazon’s global workforce rose by 75 percent, Google’s by almost 60 percent, Meta’s by around 50 percent. The speed of that hiring, and the difficult circumstances under which it had to be done, probably meant those companies ended up with a high number of workers who weren’t a great fit, which would have required some readjustment even if demand hadn’t cooled off post-pandemic.

The pressure to downsize was undoubtedly exacerbated by rising interest rates. For more than a decade, tech companies could borrow cheaply (as Netflix has to fund its content library, to the tune of billions), while investors were willing to take on greater risk to secure a halfway decent return. This explains how so many start-ups got to billion-dollar valuations without ever turning a profit — and why the recent rate increases have produced such a sharp turn and brutal hangover in Silicon Valley.

I doubt the decline of easy money is a major issue at companies like Google and Meta, which don’t have huge debt loads. For them, I suspect the problem is even larger: the companies themselves have long been money-printing machines — and the machines are at risk of breaking down.

Alexandra Petri: Not another column about Elon Musk

Development economists often talk about a “resource curse” afflicting countries that are blessed with, say, massive oil deposits. A big pile of almost free money is a lot of fun, but it saps your will to develop other parts of your economy, and indeed makes it harder to do so — how can other industries compete for workers given the salaries available in natural resource extraction?

Facebook and Google have been sitting on digital goldmines, dominating their consumer niches and the market for digital advertising. Now the advertising business is eroding. Last year, Meta reported its first year-on-year decline in revenue as recession fears squeezed spending — and other firms are rising to take more market share. Worse still, Meta’s core business is threatened by the rise of TikTok. Google has to be eyeing Microsoft’s Bing, now powered by advanced AI, with growing unease.

More competition in quasi-monopolies like search is a good thing. So is freeing up top tech talent to work in other companies, or, dare I say it, even other sectors of the economy? It’s hard on the workers themselves, who have my full sympathy. (I spent two years in the employment wilderness after the dot-com bust, and it’s awful.) But from the perspective of society as a whole, it’s better to have high-valued workers at firms that really need them than assigned to marginal roles at overstaffed companies. It might even be better for the workers themselves, if it gives them, and their new employers, a chance to become superstars in their own right.