US Business

Anxious employees, wary advertisers and hamstrung management: Twitter is limping along as it waits to learn how the fight over Elon Musk’s buyout bid will end.

Just days before the first court hearing in Twitter’s lawsuit seeking to force the Tesla boss to close the $44 billion deal, the firm is stuck in limbo.

“The best conclusion for me would be that he leaves us alone, so that we can go on our merry way,” an engineer at the key social media network told AFP on condition of anonymity. 

The engineer spoke of employees departing and a “climate of uncertainty that does not leave one with a peaceful state of mind.” 

“We’re still trying to do our work normally, because the main reasons why we chose to work for Twitter still hold true,” he added.

But there’s been nothing normal about Musk’s unsolicited bid that he’s now backed away from, saying Twitter has obfuscated on the number of fake accounts on the platform.

He has harangued the network, on its own platform no less, with mocking tweets about its management and direction.

“Musk’s repeated disparagement of Twitter and its personnel, create uncertainty… that harm Twitter and its stockholders,” the firm’s lawyers argued in their lawsuit lodged this week.

The billionaire’s comments “also expose Twitter to adverse effects on its business operations, employees, and stock price,” the lawyers added.

A judge has set the first hearing in the case for Tuesday in a court in the eastern state of Delaware.

– Sluggish ad sales – 

“Twitter is facing a huge image crisis, and confidence in its leadership is wavering,” eMarketer analyst Debra Williamson told AFP. “But whether the Musk situation has affected its revenues is unclear.”

She said the most loyal advertisers have likely stuck around, but those less committed to Twitter may have scaled back their spending while waiting for the endgame.

Angelo Carusone, president of watchdog group Media Matters, thinks the damage is already done because Musk has been a frequent critic of content moderation.

The fight against hate and disinformation is widely defended internally, but also by many advertisers, concerned that their brands are not associated with toxic messages. 

Carusone said that in early May, at an annual marketing event where companies negotiate large advertising deals, Twitter was “not able to give advertisers any clarity or confidence” that it would continue to be safe showcase for them.

“They didn’t go anywhere close to what they normally sell at that event. And it’s obviously been sluggish since then,” he added. 

The San Francisco-based social network cannot afford to lose customers. 

Unlike big fish such as Google and Facebook parent Meta, which dominate online advertising and make billions in profits, Twitter lost hundreds of millions of dollars in 2020 and 2021.

The group will capture less than one percent of global ad revenue in 2022, according to eMarketer, compared to 12.5 percent for Facebook, 9 percent for Instagram and nearly two percent for booming upstart TikTok. 

On top of that, Twitter’s user base is barely expected to grow and may even shrink in the United States, noted Williamson, the eMarketer analyst.

– ‘Twitter can’t meaningfully respond’ – 

Musk once had potential Twitter investors salivating with his talk of growing revenue fivefold and aiming for a billion users by 2028.

Instead, a court battle is building to “end either with Twitter being owned by an unhappy investor who decided he didn’t want it after all, or with Twitter on its own and weaker than it was before this all started,” Williamson added.

The battle is set to last for months, and at a time when economic headwinds are steady and firms need to be nimble to monetize new audio and video formats, diversify revenue sources and attract younger audiences.

“At least Facebook can respond to current threats, even if they’re responding poorly, they can respond,” said Carusone, the Media Matters president.

“What Twitter cannot do right now is meaningfully respond to anything.”

The social network’s lawyers have blamed Musk for withholding consent for two employee retention programs “designed to keep selected top talent during a period of intense uncertainty generated in large part by Musk’s erratic conduct.” 

Internally, some employees have also lost confidence in management, which they would have liked to be more combative in dealing with the world’s richest person. 

Parker Lyons, a financial analyst at Twitter, went so far as to tweet several memes that took aim at the firm’s board for its deal with Musk.

In one, the board is shown firing bullets into Twitter above the sarcastic caption: “Who could have done this?”

Tesla chief Elon Musk asked a Delaware court Friday to reject a bid by Twitter to put their $44 billion merger lawsuit on trial in September, instead asking to push it back until next year.

In a court document cited by US media, Musk’s lawyers accuse Twitter’s board of directors of wanting to expedite the case. 

Twitter on Tuesday sued Musk for breaching the contract he signed to buy the tech firm, calling his exit strategy “a model of hypocrisy.”

The suit filed in the US state of Delaware urges the court to order the billionaire to complete his deal to buy Twitter, arguing that no financial penalty could repair the damage he has caused.

The social media giant wants to hold the trial in September so as not to prolong the period of uncertainty currently threatening the company. 

But Musk asked that the trial not start before February 13, citing the complexities involved.

Musk’s lawyers did not immediately respond to a request by AFP for comment. 

The billionaire had agreed to buy Twitter at the end of April.

But after weeks of threats, Musk last week tried to pull the plug on the deal, accusing Twitter of “misleading” statements about the number of fake accounts.

That set the stage for a potentially lengthy court battle with Twitter, which has defended its fake account oversight and vowed to force Musk to complete the deal, which contained a $1 billion breakup fee.

The social network says the number of fake accounts is less than five percent, a figure challenged by Musk, who says he believes the percentage is much higher.

His lawyers say proving that will require analyzing mountains of data.

A preliminary hearing is scheduled for Tuesday in a business law court in Delaware.

Stocks soared Friday after retail sales data showed that US consumers continue to spend more in the latest signal of the economy’s resilience despite high inflation and rising interest rates.

Better-than-expected results from Citigroup also helped temper concerns about what lies ahead for investors as more companies report second-quarter results.

The euro held above $1.00, having sunk below parity this week on fears Russia would cut off Europe’s gas supplies in retaliation for Ukraine war sanctions.

Oil prices rebounded, after slumping Thursday on recession fears.

Wall Street pushed higher on a better-than-expected 1.0 percent rise in retail sales in June.

While not adjusted for inflation, sales were still up 0.7 percent even when gasoline was removed from the calculation, according to the Commerce Department data.

“This could be good news for US GDP which suggests that the economy may well avoid a contraction in (the second quarter), and ergo a technical recession,” said analyst Michael Hewson at CMC Markets.

The figure was also looked at through the prism of how it might affect the US Federal Reserve’s decision later this month on interest rates, with the solid growth giving policymakers license to hike rates more aggressively.

Markets had taken a major knock this week from news that annual US inflation zoomed to a new 40-year high of 9.1 percent in June on energy costs.

After rate increases by several countries, investors now expect the Fed to hike  by 75 basis points later this month, as officials battle to cool soaring prices, though some observers suggest a one-percentage-point move could even be on the cards.

While experts warn that raising US rates risks hammering the economy, the Fed has made it clear the number-one priority is bringing down inflation.

Meanwhile, Citigroup’s net profits fell by 27 percent to $4.5 billion, yet earnings per share easily beat expectations. The banking group took in more revenue and benefited from rising interest rates.

Citigroup shares jumped more than 13 percent.

The blue-chip Dow Jones Industrial Average led the major US indices, climbing 2.2 percent to 31,288.26, snapping a five-day losing streak.

European stocks also finished the day sharply higher.

In Asia, Hong Kong and mainland Chinese equity markets led losses after data showed China’s economy grew just 0.4 percent in the second quarter, battered by Covid lockdowns in major cities including Shanghai and Beijing.

The reading was well off the 1.6-percent growth predicted by analysts in an AFP survey

– Key figures at around 2030 GMT –

New York – Dow: UP 2.2 percent at 31,288.26 (close)

New York – S&P 500: UP 1.9 percent at 3,863.16 (close)

New York – Nasdaq: UP 1.8 percent at 11,452.42 (close)

London – FTSE 100: UP 1.7 percent at 7,159.01 (close)

Frankfurt – DAX: UP 2.8 percent at 12,864.72 (close)

Paris – CAC 40: UP 2.0 percent at 6,036.00 (close)

EURO STOXX 50: UP 2.4 percent at 3,477.20 (close)

Tokyo – Nikkei 225: UP 0.5 percent at 26,788.47 (close)

Hong Kong – Hang Seng Index: DOWN 2.2 percent at 20,297.72 (close)

Shanghai – Composite: DOWN 1.6 percent at 3,228.06 (close)

Euro/dollar: UP at $1.0088 from $1.0018 Thursday

Pound/dollar: UP at $1.1865 from $1.1824 

Euro/pound: UP at 85.00 pence from 84.73 pence

Dollar/yen: DOWN at 138.54 yen from 138.96 yen

West Texas Intermediate: UP 1.9 percent at $97.59 per barrel

Brent North Sea crude: UP 2.1 percent at $101.16 per barrel

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The United States and Russia said Friday they would renew flights together to the International Space Station, preserving one of the last areas of cooperation amid Western attempts to isolate Moscow over the invasion of Ukraine.

“To ensure continued safe operations of the International Space Station, protect the lives of astronauts and ensure continuous US presence in space, NASA will resume integrated crews on US crew spacecraft and the Russian Soyuz,” the US space agency said in a statement.

NASA said that astronaut Frank Rubio would fly with two Russian cosmonauts on a Soyuz rocket scheduled to launch on September 21 from Kazakhstan, with another astronaut, Loral O’Hara, taking another mission in early 2023.

In a first, Russian cosmonauts will join NASA astronauts on SpaceX’s new Crew-5 which will launch in September from Florida with a Japanese astronaut also on the mission.

Another joint mission on the SpaceX Crew-6 will fly out in early 2023, NASA said.

The move comes despite the European Space Agency earlier this week terminating its relationship with Russia on a mission to put a rover on Mars, infuriating Russian space chief Dmitry Rogozin who banned cosmonauts on the ISS from using a European-made robotic arm.

But hours before NASA’s announcement, President Vladimir Putin dismissed Rogozin, a firebrand nationalist and ardent backer of the Ukraine invasion who once quipped that US astronauts should get to the space station on trampolines rather than Russian rockets.

Roscosmos, the Russian space agency, said the agreement with NASA was in the interests of both countries and “will promote cooperation” on space.

“The agreement seeks to guarantee that in the event of an emergency caused by the cancellation or major delay in a Russian or American space launch, at least one Roscomos cosmonaut and one NASA astronaut will be present to service the Russian and American sections respectively,” it said.

NASA said that the ISS was set up for joint participation by the United States and Russia along with Europe, Japan and Canada.

“The station was designed to be interdependent and relies on contributions from each space agency to function. No one agency has the capability to function independent of the others,” NASA said.

– ‘Dear friends’ in space –

Soyuz rockets were the only way to reach the space station until SpaceX, run by the billionaire Elon Musk, debuted a capsule in 2020.

The last NASA astronaut to take a Soyuz to the station was NASA astronaut Mark Vande Hei in 2021. 

He returned to Earth in March this year alongside Russian cosmonauts, also on a Soyuz. 

Speaking to reporters afterward, Vande Hei said that the cosmonauts remained his “very dear friends” despite their nations’ tense relationship.

“We supported each other throughout everything,” he said. “And I never had any concerns about my ability to continue working with them.”

The United States has imposed sweeping sanctions on Russia after Putin on February 24 invaded Ukraine, defying Western warnings.

The sanctions, which include tough restrictions on financial interactions, have led to an exodus of leading US brands from Russia including Starbucks and McDonald’s.

But the International Space Station is unique. It was launched in 1998 at a time of hope for US-Russia cooperation following their Space Race competition during the Cold War.

The ISS is expected to wind down in the next decade.

Rogozin had warned that Western sanctions could affect cooperation.

“If you block cooperation with us, who will save the ISS from uncontrolled deorbiting and falling on US or European territory?” Rogozin wrote in a tweet earlier this year.

Kremlin spokesman Dmitry Peskov did not indicate that his removal meant Putin was unhappy with Rogozin.

One independent media outlet said he would be promoted and could be put in charge of occupied territories in Ukraine.

A Turkish businessman wanted on money laundering, wire fraud and obstruction charges was extradited from Austria to the United States on Friday, the Justice Department said.

Sezgin Baran Korkmaz was escorted by US Marshals to Utah, where he has been indicted for allegedly laundering more than $133 million through bank accounts he controlled in Turkey and Luxembourg.

Korkmaz was arrested in Austria in June of last year and had been fighting extradition to the United States, telling a Turkish reporter from jail that he would rather face justice at home, where he is also wanted for money laundering and fraud.

According to a US indictment, Korkmaz and co-conspirators were involved in a scheme to defraud the US Treasury by filing false claims for more than $1 billion in tax credits allegedly for the production and sale of biodiesel by their company, Washakie Renewable Energy LLC.

Jacob and Isaiah Kingston pleaded guilty in July 2019 to federal charges and testified in 2020 at the trial in Utah of another co-conspirator, Levon Termendzhyan, who was convicted of all charges.

Korkmaz and his co-conspirators allegedly used proceeds from the fraud to acquire luxury homes, businesses such as Biofarma, the Turkish airline Borajet, a yacht named the Queen Anne, a hotel in Turkey and a villa and apartment on the Bosporus in Istanbul, according to the US authorities.

Working with officials in Lebanon, US Marshals seized the Queen Anne in July 2021 and sold it for $10.11 million.

The Justice Department said Korkmaz faces a maximum penalty of 20 years in prison for each count of money laundering conspiracy, wire fraud and obstruction of an official proceeding.

The United States had been insisting on his extradition from Austria because the likelihood of Ankara extraditing him should he have been sent back to Turkey was low.

A large part of the reason lies in Washington’s refusal to hand over a US-based Turkish cleric President Recep Tayyip Erdogan believes plotted a failed coup against him in 2016.

According to the Organised Crime and Corruption Reporting Project, Korkmaz played a role in Ankara’s efforts to curry favor with president Donald Trump in his first years in the White House.

The investigative group also alleged that Korkmaz facilitated a 2018 trip for Americans linked to Trump who sought to secure detained US pastor Andrew Brunson’s release from Turkey.

The pastor’s fate became a major issue for Trump, who thrust him to the fore of US-Turkish relations until Brunson’s eventual release in late 2018.