A black Friday for Twitter employees
The day many workers at Twitter have dreaded since Elon Musk took control of the social network has arrived. By 9 a.m. Pacific, an unknown — though likely significant — number will find out via a complicated system whether they’ll still be a Twitter employee. Another unknown: whether Elon Musk is conducting the mass layoffs lawfully.
How it will work: According to a leaked internal memo, employees should expect to receive an email titled “Your Role at Twitter.” Where they get it will be the first indication of their fate: If they receive it in their work email, they’re still employed; if it goes to their personal email, they’re laid off. Twitter’s offices will be closed on Friday.
Meanwhile, employees have complained that — until the layoffs notification — they hadn’t received any official communications from Musk or other leaders. It’s a huge change for staffers who were used to the old-Twitter ethos of open communication: “It’s like Twitter’s culture has been completely turned inside out overnight,” one employee told The Washington Post.
In a smaller change, Musk has also eliminated monthly “days of rest” for Twitter employees, according to Bloomberg.
It’s unclear whether the layoff process is following legal protocols. Federal and California laws require companies to provide advance notice of mass layoffs — the federal WARN Act requires 60 days’ notice — but it isn’t apparent whether Musk has done so. As of last night, California’s Employment Development Department said it hadn’t received any such notice. That could lead to potential action by employment regulators. Twitter has already been sued by three employees alleging that the company violated the WARN Act.
Advertisers seem increasingly wary of the uncertainty. Volkswagen’s Audi, General Mills and Mondelez were among the latest companies to pause their ad spending on Twitter. They’re concerned about a potential pullback on content moderation making Twitter a more toxic platform, the chaos of Musk’s first days owning the company, or both.
That may mean more headaches for Musk, who is making a push for subscriptions and more to cut costs and raise money so he can make the math work on his $44 billion takeover.
HERE’S WHAT’S HAPPENING
Layoffs are coming to other tech companies too. The ride-hailing company Lyft and the payment processor Stripe are cutting jobs, while Amazon and Apple are pausing hiring for most positions. The moves show that Elon Musk isn’t the only tech C.E.O. looking to retrench ahead of a potential recession.
Billionaire donors help shatter political spending records. Total spending on federal and state races in 2021 and 2022 could exceed $16.7 billion, according to estimates by Open Secrets. Moguls like George Soros, Ken Griffin of Citadel and Sam Bankman-Fried of FTX are among the biggest donors; most of the major contributors gave to Republicans.
President Biden reportedly weighs eliminating debt-ceiling fights until 2025. The White House and Democratic leaders in Congress are exploring ways to unilaterally pass increases in the debt ceiling that would extend past the 2024 election, according to Politico. Democrats are worried about Republicans threatening America’s creditworthiness for political purposes.
Chinese stocks jump again on hopes for an end to zero-Covid policies. Despite rebuttals by government officials, investors again latched onto unverified reports that Beijing would loosen tight pandemic restrictions to help bolster China’s slowing economy. Meanwhile, Hong Kong’s leaders bent the city’s strict Covid rules for visiting corporate executives to show it’s open for business.
The Bank of England predicts tough times ahead. After the central bank lifted its key interest rate by 0.75 percentage points yesterday, officials said Britain faced a “prolonged” recession that could last two years. But analysts, sensing that future interest rate increases would be smaller, said they expect mortgage rates to fall.
The Washington Command-zos?
The Amazon founder Jeff Bezos is reportedly weighing a bid for the Washington Commanders, and may team up with Jay-Z, according to The Washington Post, which Bezos owns. (People first reported the news.) But buying the N.F.L. team could force Bezos to make big concessions that would affect his business empire.
With an estimated fortune of $113.2 billion, Bezos would be a formidable bidder for the Commanders. Forbes values the last-place team at roughly $5.6 billion, but it could fetch much more. Bezos would likely have to contend with a field of other suitors for the team, but his enormous wealth may make him a favorite, much as the Walmart heir Rob Walton quickly emerged as the front-runner to buy the Denver Broncos.
Would Bezos have to cut ties to Amazon to succeed? Though he stepped down as Amazon’s C.E.O. last year to become executive chair, he’s still engaged, according to his successor, Andy Jassy. Those strong ties raise questions about a potential conflict of interest if he were to own the Commanders.
Chief among them is the fact that Amazon Prime streams N.F.L. games, after the tech giant paid $1 billion a year for exclusive rights to Thursday night matchups through 2033. It’s hard to imagine a scenario in which Bezos, as an N.F.L. team owner, would participate in negotiations with Amazon — or other broadcasters — over future streaming agreements. That may force him to choose between the two pursuits — and if he picks football, it would speak volumes about his long-term commitment to Amazon.
Such conflicts (and concessions) are nothing new in American sports. Michael Rubin, the founder and C.E.O. of the sports-merchandising giant Fanatics, recently gave up his stake in the corporate owner of the N.B.A.’s Philadelphia 76ers and the N.H.L.’s New Jersey Devils, to avoid conflicts with those leagues as Fanatics moves into sports betting.
Exclusive: Elizabeth Warren goes after Cerberus
Pressure is growing on Albertsons over its plan to pay shareholders a $4 billion special dividend ahead of the grocer’s proposed $24.6 billion sale to Kroger. A judge in Washington temporarily blocked the payout, after the state’s attorney general and others sued to stop it. (Albertsons will appeal the judge’s order.)
Now lawmakers led by Elizabeth Warren, Democrat of Massachusetts, are taking aim at Albertsons’s largest shareholder and former owner, the private equity firm Cerberus Capital Management, DealBook is first to report.
Is the dividend a part of the deal, the lawmakers asked in a letter to Cerberus’s co-C.E.O.s? Kroger initially said it was, but the two grocery companies later said otherwise. If the dividend is part of the transaction, that could constitute “gun-jumping,” where merger partners collaborate on business decisions before their deal closes — a potential violation of antitrust law. (The state attorneys general suing to block the dividend have also cited antitrust concerns.)
The lawmakers are also worried about Albertsons’ financial health. If the Kroger deal collapses, Albertsons could face dire financial straits, the politicians write; if it goes through, the dividend would be a big burden on the combined company. (Albertsons says it’s confident about its “strong financial position”: It would have about $500 million in cash and $2.5 billion in available lending after paying out the dividend.)
Warren and her colleagues also criticized the payout as a giveaway to Cerberus and other shareholders, when it should go to hiring more workers, improving stores or reducing prices. (Warren, no fan of private equity, repeated some of her criticisms of leveraged buyout firms, and Cerberus in particular, for good measure.)
The not-so-hidden message: We don’t like this deal. “There is mounting evidence that even as your firm would receive a massive windfall, workers and consumers would lose out if this merger were to proceed,” the lawmakers write. Their letter is full of arguments for why the transaction shouldn’t go forward.
“Quit writing checks to everybody. The investments you’ve made in politics from the Democrat side, and the Republican side, by asking nothing in return, is a foolish investment.”
— Senator Joe Manchin, Democrat of West Virginia, advising business leaders at a Fortune conference that they ought to rethink the way they make political donations.
Weekend read: “The White Wall”
Emily Flitter, who writes about banking for The Times, got a tip in 2018 that a large Wall Street firm had fired one of its Black employees without cause. From there, she started digging into how America’s biggest banks and insurers treat their Black staff and customers, finding examples of racial profiling and discriminatory practices in hiring and layoffs. She spoke with Andrew about her new book, “The White Wall: How Big Finance Bankrupts Black America.” This interview has been edited for brevity.
What was the impetus for writing the book?
I kept hearing these stories of racism that looked like one-offs. But then there was something bigger when I connected with Ricardo Peters [a former financial adviser at JPMorgan Chase whose story of racial discrimination on the job was covered in the Times in 2019]. He had a ton of material. He had recorded every step of the process and the experience that he had gone through, starting from when he felt like his boss wasn’t treating him right, to the interactions that he had with JPMorgan managers and H.R. officials.
JPMorgan is singled out in the book. Are there firms that you think are doing better, worse?
I actually don’t think JPMorgan is any worse than any other bank. That’s the point. The reason it’s easiest to focus on JPMorgan is that they’re the biggest, and they’re also in many ways the most sophisticated.
How do you compare racism on Wall Street relative to corporate America?
Racism’s existence in this industry has just such a devastating impact on people’s lives. It really radiates out into the rest of the economy.
What has been the banks’ reaction to the book?
Crickets. But I haven’t heard from a single Black reader who hasn’t said, ‘Wow, this describes my experience.’ Or, ‘I feel validated.’ I’m getting a really strong outpouring of people saying, ‘Thanks for putting this all in one place, because it’s our reality.’
THE SPEED READ
Supporters of Gigi Sohn worry her nomination to the F.C.C. is being stymied by political lobbying on behalf of Comcast and Fox News. (The Verge)
Advisers to Donald Trump warned the former president not to file his latest lawsuit against Letitia James, New York’s attorney general. (NYT)
A test for deep-sea mining of electric vehicle components has international regulators pondering whether to fully allow the practice starting in 2024. (NYT)
Best of the rest
CNBC has canceled Shepard Smith’s evening show, ending its latest foray into general-interest news. (NYT)
More Chinese rockets are falling back to earth. (Washington Post)
Clearing traffic jams on this 1,900-mile stretch of highway in Africa could be a key to resolving the electric vehicle industry’s supply-chain woes. (Bloomberg)
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