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Elon Musk’s Twitter layoffs ‘a painful experience for the company’, expert says

Matt Perault, director of UNC’s Center on Technology Policy, joins Yahoo Finance Live to discuss Twitter’s challenges, the impacts of mass layoffs and the fragmentation of the tech sector.

Video transcript

AKIKO FUJITA: Let’s continue the conversation with our first guest of the hour. We have Matt Perault. He is director of the Center on Technology Policy at UNC. He is also a former director of public policy at Facebook.

And Matt, you know, I thought of you as the perfect person to weigh in on that as someone who had to deal with it, okay, on another social media platform. You heard Dan address the speculation there. Can Twitter continue to operate at its current scale, in its current form, given the mass exodus it has experienced? What do you think?

MATT PERAULT: Well, I’ve worked at a tech company before, but I’ve never experienced layoffs of 30-50% of the employee base. Obviously, this is incredibly important. It is a painful experience for the company. And of course, it’s a deeply painful experience for employees.

I don’t know enough about exactly how Twitter’s content moderation processes work to know whether or not these will be profoundly affected. I guess they will. And that’s going to play out in the months and potentially years to come to see what that looks like for content moderation and the state of harmful content and misinformation, misinformation and safety issues on this platform .

AKIKO FUJITA: Matt, it’s worth pointing out the numbers again. I mean, Twitter, since Elon Musk took over, has laid off about half of its staff. Since then, we have also received these reports from contractors who have been made redundant. You have this ultimatum. Turns out a lot of employees were willing to accept that for a three-month severance package.

I realize that content moderation isn’t just a numbers game, but given what you know, the involvement needed to make sure the content is safe, make sure there’s has data privacy on a platform, what does that kind of disruption mean for a business?

MATT PERAULT: Well, even before the layoffs, Twitter was already much smaller than most of the other companies mentioned in the same breath. Facebook, before its recent layoffs, had more than 80,000 employees. Google is around 140,000. Apple is 165,000. So Twitter, before its layoffs, was around 7,500. That’s already much, much smaller. And then a reduction of 30% to 50% obviously makes the company very small compared to its peers.

I don’t think we know exactly what this will mean for content moderation. There are processes in place that allow a small number of people to moderate content at scale, such as the sophisticated use of artificial intelligence. I don’t know the extent of these technologies on Twitter. But obviously, I think it’s likely to have a significant effect on their ability to moderate content as aggressively as they might have been in the past. And the question is how this will affect the user experience for most Twitter users.

AKIKO FUJITA: One of the things that you pointed out, though, even though it led to a lot of questions about what is still a very popular platform, you said, listen, a lot of these tech companies have grown significantly in the recent years. A little thin is not necessarily a bad thing. What about this–

MATT PERAULT: Yeah, I think…

AKIKO FUJITA: –yet? I mean, how do you feel about that in the context of that?

MATT PERAULT: Yeah, so again, we don’t know exactly what this size of cuts in a company that started at this already small size will be on a Twitter user-scale platform. And again, I think there’s probably a risk of harm that users will be harmed and the experience in the platform will be worse. But I think you have raised a very important point. I think there’s a bloat going on in the tech sector right now. I think that’s part of the reason we’ve seen the layoffs we’ve had.

And I think there’s a push, especially on the competition side, people who are making arguments about competition and wanting companies to be as innovative as possible, that we should welcome aggressive innovation. And that will likely displace employees or lead to the release of some unsuccessful products, as Musk has already done. I don’t know if Twitter will succeed or fail in the future. But I think an incentive to innovate more aggressively, to consider bringing in new talent, to revamp processes could be helpful for product innovation there.

AKIKO FUJITA: Finally, Matt, you know, Elon Musk obviously a very polarizing figure, as we’ve learned over the past few weeks. Putting all the cuts aside, you definitely have users who said, well, now that he owns the platform. I will move on to another. Mastodon who saw a lot of benefits behind it.

And I wonder if – as we see all of this unfolding, it’s leading to more fragmentation in the social media space. I mean, thinking back to when you were on Facebook, that was sort of the beginning, but it didn’t seem as polarizing as it does today. Do you think there is a fundamental change in how these platforms are used and what is elevated as a result?

MATT PERAULT: I really feel like this is an opportunity for mature competition. Several of the platforms face significant challenges. And I think it’s time for their leaders to innovate new ways with products to see if that leads to user loss, to see where users gravitate to, if a product like Mastodon will actually be competitive, and if people will find it replicates or enhances the experience they have on Twitter.

I think that kind of innovation is a welcome thing, but there is pain associated with it. I don’t think innovation necessarily always produces good results. I think there will be pain in this process. But I think it’s valuable for companies to look at aggressive new ways to think about a whole bunch of different issues – content moderation, the kinds of business models they have in place. It seems like a positive thing to me.

AKIKO FUJITA: Well, Matt, it’s always good to have your opinion. Matt Perault, director of the Center on Technology Policy at UNC and former director of public policy at Facebook.