Elon Musk took over a struggling business with Twitter and has quickly made it worse
The Twitter profile page belonging to Elon Musk is seen on an Apple iPhone mobile phone.
Nurphoto | Nurphoto | Getty Images
When Elon Musk said last week that Twitter has experienced a “massive drop in revenue” under his recent tutelage, he blamed the decline on “activist groups pressuring advertisers.”
There was some merit to his claim. A group of civil rights leaders had sent a letter to the CEOs of major companies, including Anheuser-Busch, Apple, Coca-Cola and Disney, urging them to relay their concerns about brand safety on the site to Musk. Later, the group would call for those businesses to halt ad spending on Twitter following what its leaders saw as a rise of racist posts and hate speech.
While Musk may be right to attribute some of the revenue drop to activist pressure, at least part of the responsibility falls on him. Twitter’s new owner, the world’s richest person, recently tweeted a conspiracy theory related to the attack on Paul Pelosi, husband of House Speaker Nandy Pelosi, and has made a series of crude and sophomoric jokes, some of which he’s quickly deleted.
Businesses don’t want to link their brands with that sort of behavior and content, said Rachel Tipograph, CEO of advertising technology firm MikMak.
“There’s concerns with advertisers around brand safety, and that’s really what this is all about,” Tipograph said. “Advertisers right now are not looking to be associated with the events that are currently happening at Twitter.”
Companies like General Motors and Volkswagen have paused their spending on Twitter following Musk’s arrival, while advertising titan Interpublic Group recommended that its clients do the same. The boycott poses a significant problem for the social media service, which derives 90% of sales from advertising.
Compared to larger rivals Facebook and Google, Twitter never managed to develop an online ad business that matched the scale of its influence in popular culture and society at large. Twitter has lost money in six of the eight years since its IPO. Its revenue in 2021 reached $5 billion, while Facebook generated sales of $118 billion and Google parent Alphabet recorded $257 billion in revenue.
Twitter’s revenue in the second quarter declined from a year earlier.
“In my humble opinion, to use a very technical term, their business sucks, and they need a radical transformation,” said Len Sherman, an adjunct professor of business at Columbia Business School.
It’s a business that Musk shelled out $44 billion to purchase. As part of the deal, he borrowed $13 billion, which he has to pay back.
For that investment, he got a company with “very poor targeting capabilities in an ad-based business where that’s essential,” Sherman said. “I kind of laugh because I keep getting Twitter promoted ads in my stream for companies that would be better directed to 13-year-old girls.”
On Wednesday, Musk is holding an audio meeting with advertisers on “Twitter Spaces.”
Twitter didn’t respond to requests for comment.
The YouTube approach
Musk did himself no favors after the acquisition, which closed in late October. In addition to his own questionable tweets and retweets, he’s been inconsistent in laying out what he means by free speech and acceptable content on the platform, and he abruptly fired roughly 50% of Twitter’s staff almost immediately, raising further questions about content moderation.
Companies typically halt their advertising campaigns if they feel they may suffer reputational damage. For example, businesses boycotted Alphabet’s YouTube in 2017 over concerns their ads would be played alongside extremists’ videos.
YouTube executives responded quickly at the time, allowing third-party verification of content, and hired more people to remove the offensive videos. Advertisers came back and the business rebounded promptly.
Musk would rather take a combative approach to advertisers. In response to a tweet recommending that he name the brands that are boycotting Twitter so that his followers can turn around and boycott them, Musk said “a thermonuclear name & shame is exactly what will happen if this continues.”
Meanwhile, Musk is taking a convoluted approach to banning users. Comedian Kathy Griffin was booted for impersonating Musk on the site, while Sarah Silverman had her account locked temporarily for a similar offense.
Jeff Seibert, Twitter’s former head of consumer product, called it “a mistake for Elon to be the face of content moderation.” In the past, Twitter has taken a team approach to policy violations.
“If you put one person in charge of it, I think you start seeing random decisions like this that then [cause people to] lose trust,” Seibert said.
Kathy Griffin attends the premiere of ‘A Hell of a Story’ during the 2019 SXSW Conference and Festival at the Zach Theatre on March 11, 2019 in Austin, Texas.
Tim Mosenfelder | Getty Images Entertainment | Getty Images
Twitter’s advertising business has already started deteriorating under Musk.
Data from MikMak, whose clients include Colgate, Unilever and General Mills, show a broad pullback in ad spending on Twitter. From Oct. 1 through Nov. 7, Twitter suffered a 68% drop in media traffic, which refers to the number of times people click on an ad, according to MikMak.
Before that, the numbers had been going up. Twitter’s media traffic increased 56.3% from July 1 to Sept. 30, and 326% from April 1 through June 30.
“We were actually seeing an uptick in Twitter traffic,” Tipograph said. “As soon as Elon Musk’s potential ownership was becoming more imminent, we significantly saw a change in traffic.”
Whatever tech and business improvements were taking place will be difficult to sustain, as the mass layoffs ate into Twitter’s global marketing team, whose responsibilities include reporting and metrics around ad performance, CNBC reported.
‘Now pay $8’
Musk has turned his focus to subscriptions as the key to reviving Twitter’s financials. He’s pitched an $8-a-month offering that allows people to be “verified” and gain premium features. The critics have been so vociferous that Musk on Monday tweeted an image of a t-shirt, reading “Your feedback is appreciated. Now pay $8.”
Musk has previously hinted that he wants to convert Twitter into a so-called super app, similar to China’s WeChat, that people can use to talk to friends, watch movies and buy goods.
Still, he’ll need partners that want to work with him. And his aggressive stance towards companies that have paused ads on the site isn’t a good look as he pursues other partnerships, said Jeanine Turner, a professor in Georgetown University’s Communication, Culture and Technology program.
The “big issue for him I would think would be trust,” Turner said. “I don’t see people trusting him with all of that information.”
As for advertisers, many brands don’t consider Twitter an essential avenue for distribution considering its less sophisticated ad-tracking technology and targeting capabilities. Other opportunities are emerging, such as connected TVs and streaming services as well as Amazon’s growing online ad business for retail-oriented companies, Tipograph said.
Jessica González, the co-CEO of nonprofit group Free Press, has been unimpressed with Musk’s antics. Gonzalez was one of the civil rights leaders who spoke to Musk last week, expressing concern about the rise of hate speech against Black and Jewish groups on Twitter. It’s the same group that was urging advertisers to halt their campaigns.
González said she was willing to give Musk “the benefit of the doubt” when he told the group that Twitter was aligned with them. But between his rhetoric that followed and his slashing of half the staff, she has serious doubts about whether it’s worth trying to work with him.
When asked whether she would take another meeting with Musk to discuss Twitter’s approach to offensive content, she said, “I don’t know.”
“Only because he made some promises in that meeting, and then went back on them like two days later,” González said.
Technology
Spotify paid over $100 million to podcasts in the first quarter, including Joe Rogan, Alex Cooper and Theo Von
Palo Alto Networks signage displays on the screen at the Nasdaq Market in New York City, U.S., March 25, 2025.
Jeenah Moon | Reuters
Palo Alto Networks announced on Monday its intent to acquire Protect AI, a startup specializing in securing artificial intelligence and machine learning applications, for an undisclosed sum.
The deal is set to close by the first quarter of fiscal year 2026.
“By extending our AI security capabilities to include Protect AI’s innovative solutions for Securing for AI, businesses will be able to build AI applications with comprehensive security,” said Anand Oswal, senior vice president and general manager of network security at Palo Alto Networks, in a release.
Palo Alto has been steadily bolstering its artificial intelligence systems to confront increasingly sophisticated cyber threats. The use of rapidly built ecosystems of AI models by large enterprises and government organizations has created new vulnerabilities. The company said those risks require purpose-built defenses beyond conventional cybersecurity.
The acquisition would fold Protect AI’s solutions and team into Palo Alto’s newly announced Prisma AIRS platform. Palo Alto said Protect AI has established itself as a key player in what it called a “critical new area of security.”
Protect AI’s CEO Ian Swanson said joining Palo Alto would allow the company to “scale our mission of making the AI landscape more secure for users and organizations of all sizes.”
The company’s stock price is up 23% in the past year lifting its market cap close to $120 billion. Palo Alto reports third-quarter earnings on May 21.
Year-to-date stock chart for Palo Alto Networks
Technology
Cloud software vendors Atlassian, Snowflake and Workday are betting on security startup Veza
From left, Veza founders Rob Whitcher, Tarun Thakur and Maohua Lu.
Veza
Tech giants like Google, Amazon, Microsoft and Nvidia have captured headlines in recent years for their massive investments in artificial intelligence startups like OpenAI and Anthropic.
But when it comes to corporate investing by tech companies, cloud software vendors are getting aggressive as well. And in some cases they’re banding together.
Veza, whose software helps companies manage the various internal technologies that employees can access, has just raised $108 million in a financing round that included participation from software vendors Atlassian, Snowflake and Workday.
New Enterprise Associates led the round, which values Veza at just over $800 million, including the fresh capital.
For two years, Snowflake’s managers have used Veza to check who has read and write access, Harsha Kapre, director of the data analytics software company’s venture group told CNBC. It sits alongside a host of other cloud solutions the company uses.
“We have Workday, we have Salesforce — we have all these things,” Kapre said. “What Veza really unlocks for us is understanding who has access and determining who should have access.”
Kapre said that “over-provisioning,” or allowing too many people access to too much stuff, “raises the odds of an attack, because there’s just a lot of stuff that no one is even paying attention to.”
With Veza, administrators can check which employees and automated accounts have authorization to see corporate data, while managing policies for new hires and departures. Managers can approve or reject existing permissions in the software.
Veza says it has built hooks into more than 250 technologies, including Snowflake.
The funding lands at a challenging time for traditional venture firms. Since inflation started soaring in late 2021 and was followed by rising interest rates, startup exits have cooled dramatically, meaning venture firms are struggling to generate returns.
Wall Street was banking on a revival in the initial public offering market with President Donald Trump’s return to the White House, but the president’s sweeping tariff proposals led several companies to delay their offerings.
That all means startup investors have to preserve their cash as well.
In the first quarter, venture firms made 7,551 deals, down from more than 11,000 in the same quarter a year ago, according to a report from researcher PitchBook.
Corporate venture operates differently as the capital comes from the parent company and many investments are strategic, not just about generating financial returns.
Atlassian’s standard agreement asks that portfolio companies disclose each quarter the percentage of a startup’s customers that integrate with Atlassian. Snowflake looks at how much extra product consumption of its own technology occurs as a result of its startup investments, Kapre said, adding that the company has increased its pace of deal-making in the past year.
‘Sleeping industry’
Within the tech startup world, Veza is also in a relatively advantageous spot, because the proliferation of cyberattacks has lifted the importance of next-generation security software.
On the public markets, the First Trust Nasdaq Cybersecurity ETF, which includes CrowdStrike and Palo Alto Networks, is up 3% so far this year, compared with a 10% drop in the Nasdaq.
Veza’s technology runs across a variety of security areas tied to identity and access. In access management, Microsoft is the leader, and Okta is the challenger. Veza isn’t directly competing there, and is instead focused on visibility, an area where other players in and around the space lack technology, said Brian Guthrie, an analyst at Gartner.
Tarun Thakur, Veza’s co-founder and CEO, said his company’s software has become a key part of the ecosystem as other security vendors have started seeing permissions and entitlements as a place to gain broad access to corporate networks.
“We have woken up a sleeping industry,” Thakur, who helped start the company in 2020, said in an interview.
Thakur’s home in Los Gatos, California, doubles as headquarters for the startup, which employs 200 people. It isn’t disclosing revenue figures but says sales more than doubled in the fiscal year that ended in January. Customers include AMD, CrowdStrike and Intuit.
Guthrie said enterprises started recognizing that they needed stronger visibility about two years ago.
“I think it’s because of the number of identities,” he said. Companies realized they had an audit problem or “an account that got compromised,” Guthrie said.
AI agents create a new challenge. Last week Microsoft published a report that advised organizations to figure out the proper ratio of agents to humans.
Veza is building enhancements to enable richer support for agent identities, Thakur said. The new funding will also help Veza expand in the U.S. government and internationally and build more integrations, he said.
Peter Lenke, head of Atlassian’s venture arm, said his company isn’t yet a paying Veza client.
“There’s always potential down the road,” he said. Lenke said he heard about Veza from another investor well before the new round and decided to pursue a stake when the opportunity arose.
Lenke said that startups benefit from Atlassian investments because the company “has a large footprint” inside of enterprises.
“I think there’s a great symbiotic match there,” he said.
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