Latest / Elon Musk Podcast / X Faces Legal Battle Over Severance and Traffic Throttling

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X Faces Legal Battle Over Severance and Traffic Throttling · Elon Musk Podcast

• 0:00
  Hello, everybody, and welcome back to the Elon Musk podcast.
• 0:03
  Today, we're talking about a whirlwind of changes at the
• 0:05
  social media giant Twitter, which Elon Musk acquired last
• 0:08
  year and rebranded as X. And the focus of today's episode
• 0:11
  is a legal quagmire. The Swept Up Musk and his new
• 0:15
  venture talk about thousands of layoffs, missing severance
• 0:19
  payments in a tsunami of arbitration cases.
• 0:22
  It's a complex story that involves contractual
• 0:24
  obligations, courtroom strategy, and how Elon Musk's decisions
• 0:28
  are affecting the very structure of this social media platform.
• 0:32
  But before we dive into the nittygritty of this, let's give
• 0:35
  a quick shout out to our sponsorstarshipshirts.com.
• 0:38
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• 0:51
  starshipshirts.com. After Elon Musk acquired Twitter
• 0:55
  and rebranded it as Ex, the company went through several
• 0:58
  rounds of layoffs. Many employees were let go and
• 1:01
  the company promised the severance packages were allowed
• 1:04
  for them. Well, it turns out the Musk
• 1:06
  isn't actually paying those severances and that has led to
• 1:09
  quite the legal debacle. According to CNBC, Twitter now
• 1:13
  access facing staggering 2200 arbitration cases filed by
• 1:17
  former employees demanding their promised benefits.
• 1:20
  This was revealed through a new filing in a lawsuit against the
• 1:23
  company by one of his former employees.
• 1:26
  Now initially the laid off employees had launched a class
• 1:29
  action lawsuit, but due to a clause in their contracts, they
• 1:32
  had to drop that suit and go through a legal arbitration
• 1:35
  process instead. This contract mandated the use
• 1:38
  of an arbitration service called JAMS.
• 1:41
  This was at the end. The ex employees soon found
• 1:43
  themselves having to file another class action lawsuit to
• 1:47
  force Musk and X to pay the required fees for the
• 1:49
  arbitration cases as stipulated in their contracts.
• 1:54
  Now the stakes are high, financially speaking.
• 1:56
  For those 2200 arbitration cases, X would have to fork over
• 2:00
  more than $3.5 million just in filing fees to this out.
• 2:05
  To break it down, JAMS charges $2000 per two party case.
• 2:10
  The laid off employees responsible for only $400.00 of
• 2:14
  that sum, according to the contract.
• 2:16
  But this isn't the only change that Musk is implementing.
• 2:19
  According to reports, Musk has plans to strip headlines from
• 2:22
  news articles shared on the platform.
• 2:24
  Currently, when a news article link is shared, it appears as a
• 2:27
  card which includes an image, a link, a headline and a summary
• 2:31
  of the article. Musk aims to leave just the lead
• 2:34
  image in the URL, effectively altering the way news is
• 2:37
  disseminated on the platform. The resume for this, according
• 2:41
  to Musk, is to reduce the size of news posts and thus fit more
• 2:44
  posts into users timelines. In addition, Musk has invited
• 2:48
  journalists to publish directly on X.
• 2:50
  However, to get paid from Twitter's ad revenue sharing
• 2:53
  model, these journalists would need to be Twitter Blue
• 2:56
  subscribers. And furthermore, reports
• 2:58
  indicate that X has started throttling traffic to competing
• 3:02
  sites like Facebook, Instagram, Blue Sky, and the New York
• 3:05
  Times. Clicking a link to one of these
• 3:08
  sites on X would result in a 5 second delay before the page
• 3:11
  loads. Though this delay might seem
• 3:13
  insignificant, it can lead to a noticeable loss of traffic and
• 3:17
  ad revenue for these sites. These traffic delays have fueled
• 3:20
  more legal concerns and have been met with disapproval by
• 3:23
  several outlets, and the move has raid questions about the
• 3:26
  fairness and legality of such tactics.
• 3:28
  Industry experts have pointed out that deliberately slowing
• 3:31
  down access to certain websites could be perceived as a form of
• 3:34
  manipulation or even censorship. It's also an issue that could
• 3:38
  potentially attract the attention of regulators.
• 3:40
  And moreover, the delay has affected the t.co domain, a link
• 3:45
  shortening service that X uses to process every link posted to
• 3:49
  the website. This means that X can track, and
• 3:51
  in this case, throttle activity to the target website,
• 3:55
  potentially redirecting traffic and ad revenue away from
• 3:58
  businesses that must personally dislikes.
• 4:01
  This kind of control has led some to question whether it's
• 4:04
  ethical or even legal to manipulate traffic in this way.
• 4:08
  For instance, The Washington Post conducted tests and found
• 4:11
  that the delayed websites includes X's online rivals
• 4:15
  Facebook, Instagram, Blue Sky, and Substack, as well as the
• 4:19
  Reuters wire service and The Times.
• 4:22
  All these have previously been criticized by Musk.
• 4:25
  It was unknown if all the throttled websites had normal
• 4:28
  service restored, but X did not begin reversing the throttling
• 4:31
  on some sites, dropping the delay times back to zero.
• 4:35
  It's worth noting that the delays also affected X's biggest
• 4:38
  rivals on social media. Links to Facebook, Instagram,
• 4:41
  and the new microblogging service threads were all
• 4:44
  throttled. All three are owned by Meta, the
• 4:46
  company formerly known as Facebook.
• 4:48
  There were some doubts of Musk's decision to slow down these
• 4:51
  rivals was a result of a technical glitch or if it was a
• 4:55
  deliberate act aimed at suppressing the competition.
• 4:58
  And in the past, Musk has expressed his desire to bring
• 5:01
  about change to the way social media is operated, for example
• 5:05
  by creating an open source algorithm that would allow users
• 5:08
  to customize their own feed. However, as a business owner,
• 5:11
  Musk also has a responsibility to play by the rules.
• 5:15
  Although the throttling of links might be a strategic move to
• 5:18
  grow, X's user base can be seen as an aggressive and unfair
• 5:21
  tactic by regulators. So what happens next remains to
• 5:25
  be seen. We don't really know where this
• 5:27
  is going, but will X be able to handle the legal challenges that
• 5:31
  lie ahead? Only time will tell.
• 5:33
  So thank you for joining us on the Elon Musk podcast today and
• 5:37
  a lot of interesting and controversial changes happening
• 5:40
  at X right now, so make sure to hit the subscribe and follow
• 5:43
  button on whatever podcast latform you're listening to.
• 5:46
  It's free, only takes a second and it's usually in the top of
• 5:49
  your podcast player, so please take care of yourselves at each
• 5:53
  other and I'll see you in the next one.