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Twitter is eagerly awaiting the outcome of its lawsuit against Elon Musk, under which the billionaire promised to buy the platform for $44 billion before backing out of the deal.

The site finds itself in a difficult situation, days before its first court hearing, in the midst of its anxious employees, reluctant advertisers and restrained management.

“If we’re single, the best decision for me is to go our own way,” said an engineer working on the social network, who did not want to be named.

The engineer described the departure of staff and “a tense atmosphere that leaves no one in a calm state of mind”.

“We’re still trying to do our job as normal because we still have reasons to work at Twitter,” he added.

But Musk’s offer was fundamentally flawed, and he later retracted it, saying the site’s management had not provided reliable information about the number of fake accounts on the network.

He later criticized the network, including on its platform, in tweets mocking its board.

The site’s lawyers said in a lawsuit they filed this week that Musk’s “repeated disregard for Twitter and its employees raises concerns … that it could harm Twitter and its contributors.”

They added that the billionaire’s comments “also have negative effects on Twitter’s business operations, employees and stock prices.”

The judge set Tuesday for the first hearing in the eastern US state of Delaware.

Yield

“Twitter is facing a major crisis in its image, while confidence in its leadership is eroding,” said eMarketer analyst Debra Williamson.

“However, it is not clear whether the Musk-related situation affected its earnings,” he added.

He found that the most loyal advertisers were more likely to stay with him, but those who were less engaged on Twitter might have cut back on advertising while waiting for the final result.

Angelo Carusan, president of the watchdog group Media Matters, believes the damage has already been done by Musk’s criticism of content management.

While fighting the spread of hate and misinformation at home, many advertisers are making efforts in this regard.

In early May, Carson said Twitter “couldn’t provide any clarity or confidence to advertisers” during an annual marketing event where companies negotiate big ad deals.

“Their sales numbers were a long way from what they usually achieve at these events, and it’s clear that demand has slowed ever since,” he added.

The San Francisco-based social media platform can’t afford to lose customers.

Unlike giants like Google and Facebook’s parent company Meta Group, which dominated electronic advertising and made billions of dollars, Twitter lost hundreds of millions of dollars in 2020 and 2021.

Twitter will account for less than 1 percent of global ad revenue by 2022, according to eMarketer, compared to 12.5 percent for Facebook, 9 percent for Instagram and about 2 percent for emerging platform TikTok.

Also, according to Williamson, an analyst at iMarketer, Twitter’s user base is not expected to grow significantly and may shrink in the US.

Musk whetted the appetite of potential investors with his earlier talk of five-fold revenue growth and reaching one billion users by 2028.

Instead, according to Williamson, a court battle is unfolding that “ends with an angry investor taking over Twitter, or leaving Twitter alone and weaker than it was before it started.”

The battle is expected to continue for months as the economic downturn drags on and companies are forced to monetize new audio and video formats, diversify revenue streams and attract younger audiences.

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