As Twitter Grapples With 200 Million Account Data Breach, Lawsuits Continue to Pile Up

The chaos and destruction of Twitter continues with a 200 million user data breach and a barrage of lawsuits.

The legendary story of Elon Musk’s stupidity running a major platform into the ground continues. The other day, we picked up the story about links being made between the major layoffs at Twitter and the Brazilian insurrection. The story about Twitter continues to develop at a pace of “blink and you’ll miss it”.

Reports did surface a while back about a major data breach that occurred at Twitter. The size of the breach varied between a couple million and 400 million before finally settling down at 200 million:

Email addresses linked to more than 200 million Twitter profiles are currently circulating on underground hacker forums, security experts say. The apparent data leak could expose the real-life identities of anonymous Twitter users and make it easier for criminals to hijack Twitter accounts, the experts warned, or even victims’ accounts on other websites.

The trove of leaked records also includes Twitter users’ names, account handles, follower numbers and the dates the accounts were created, according to forum listings reviewed by security researchers and shared with CNN.

“Bad actors have won the jackpot,” said Rafi Mendelsohn, a spokesman for Cyabra, a social media analysis firm focused on identifying disinformation and inauthentic online behavior. “Previously private data such as emails, handles, and creation date can be leveraged to build smarter and more sophisticated hacking, phishing and disinformation campaigns.”

Some reports suggested the data was collected in 2021 through a bug in Twitter’s systems, a flaw the company fixed in 2022 after a separate incident in July involving 5.4 million Twitter accounts alerted the company to the vulnerability.

So, while it seems entirely possible that the breach took place before Musk took over, it’s basically Musk’s problem to deal with the fallout. The news, of course, couldn’t really have hit at a worse time for Twitter given the chaos that has been going on.

It seems that Twitter’s decision to simply not pay the bills is continuing to not pay dividends. Already, the decision to not pay the rent for a building Twitter employees occupy has sparked a lawsuit from the building owners for breach of contract. Now, we are learning that business partners are already having to resort to lawsuits for unpaid bills for services they provided the platform. From Fortune:

Twitter Inc. was sued by one of its software suppliers for allegedly refusing to honor a multiyear, multimillion-dollar contract, the latest complaint suggesting that new management under Elon Musk is burning relations with business partners.

Imply Data Inc. claims that after paying invoices totaling about $4.4 million under a contract for proprietary software services that runs until 2024, Twitter didn’t pay its Nov. 30 quarterly bill and “disclaimed any obligation to pay any future invoices,” according to the complaint filed in San Francisco state court. Imply estimated its damages at more than $8 million.

Just a week ago, Twitter was sued by a private jet provider for refusing to pay about $200,000 for two flights taken by it former chief marketing officer as Musk was preparing to close his $44 billion acquisition of the social media platform.

Those weren’t the only lawsuits being filed. From SFGate:

Weeks after Twitter was sued for allegedly not paying rent on an office space in San Francisco, the social media platform has been sued by another company alleging non-payment of services.

The latest lawsuit was filed on Jan. 6 by Bay Area-based Canary Marketing, which says it designs merchandise for major brands, including La Croix, Gatorade, Slack and KFC. Canary — whose headquarters are in San Ramon — alleges in the suit that from June 2020 until August 2022, it provided goods and services to Twitter, and that Twitter paid for those goods and services within 60 days of receipt of an invoice. Beginning in September 2022, right around the time Elon Musk purchased Twitter for $44 billion and embarked on a personal austerity campaign, Canary says its invoices stopped processing.

“Twitter appears to interpret the [contract agreement] as allowing it to pay or not pay Canary invoices when Twitter decides to do so,” the suit reads.

Canary is suing for $392,239.11, plus interest. The company did not immediately return a request for comment. Musk got rid of Twitter’s communications team, part of a drastic workforce reduction since he took over. The company is also allegedly not paying rent on its main headquarters in San Francisco, separate from the non-payment of rent lawsuit at a different office space in the city. The headquarters also reportedly smell bad now, because Musk didn’t (or perhaps still doesn’t) want to pay for janitorial services.

Those janitors that were trying to keep the building clean are already complaining about the sudden loss of their jobs. From The Guardian:

Laureta, a single mother and janitor for years at Twitter’s offices in New York City, would like Elon Musk, one of the world’s richest people and the new owner of the social media giant, to know just how he ruined her Christmas.

Like other janitors at Twitter – and many other employees at the troubled company, which has shed thousands of staff – she said she never received any explanation for her sudden layoff.

“I was so happy working for Twitter. I was able to pay my bills, get babysitters for my kids. Now, it’s a nightmare for me. I don’t know how I’m going to do it or know what’s going to happen,” said Laureta, who did not want her last name used out of fear of future employment consequences. “There was no explanation. We worked Monday, the 19th, and that night we got the message. It was shocking right before Christmas. We didn’t have a good holiday. No merry Christmas, no happy new year, we were thinking about our jobs and if we were going back.”

On 10 January, the workers with their union, 32BJ SEIU, protested outside Twitter’s New York City offices to demand an explanation and the return of their jobs.

The workers received a notice from Twitter on the evening of 19 December that the contract with their employer and their jobs were terminated, effective immediately. They say in previous cases where a contractor was changed, Twitter had retained the same employees who have been working at Twitter since 2015.

Merita, another janitor who has worked at Twitter’s New York offices since they opened in 2015, also criticized the layoffs, especially the impact of losing health insurance, which she relies on for stomach medication she regularly requires.

“They told us at work at the last minute. We didn’t know anything. It was a shock for us. We left the building crying because we didn’t know what was going to happen,” said Merita. “It’s pretty hard because we live paycheck to paycheck to pay bills. We’re very afraid of losing health insurance. I take medication. We need health insurance, that’s why we need to fight for our jobs back to have our union, healthcare, everything.”

In Britain, employees are threatening to file a separate lawsuit over their layoffs. From Bloomberg:

Twitter Inc. was accused of carrying out a “sham redundancy process” and threatened with lawsuits by UK staff targeted by mass firings following Elon Musk’s takeover of the social-media giant.

Winckworth Sherwood LLP said Twitter had behaved “unfairly and without regard for English law” when it took moves to fire staff late last year by locking them out of company systems, according to a letter sent to the company on Monday and seen by Bloomberg News.

The London-based law firm is representing 43 of the approximately 180 affected UK employees. The firm said staffers plan to escalate their case to the Employment Tribunal, the UK labor court, if Twitter does not resolve the issues.

All of this and more have helped to absolutely tank the value of Twitter. Remember that Musk bout Twitter at $44 billion back in November. Now, the value of Twitter is much lower:

Big banks and investors that helped Elon Musk complete his $44 billion takeover of Twitter are taking a bath on their equity stakes and loans to the money-bleeding social media site, according to financial filings and sources interviewed by The Post.

Fidelity Investments has been forced to write down the initial stake it took in Twitter — valued at $19.66 million last October — to $8.63 million, according to a recent securities filing by Fidelity.

But insiders say the markdown on Twitter’s equity value could be even steeper in reality, with multiple sources noting that the $13 billion Musk borrowed against Twitter to fund the buyout would not even sell for 50 cents on the dollar.

Morgan Stanley led a group that included Bank of America, Mitsubishi, BNP Paribas, Mizuho and Societe Generale that underwrote the $13 billion loan for the Oct. 27 deal. However, Morgan Stanley has not tried to syndicate the loan because there is a very limited market for the paper and it is well underwater, two well-placed sources said.

“No one is touching this debt until a new CEO is hired and people can get clarity on the revenues,” one of the sources said.

The end result is that Musk is losing money at a record pace, even affecting Tesla stock to boot. From Slate:

Elon Musk lost $200 billion last year. Nobody had ever done that, in part because only one other person, Jeff Bezos, has ever had $200 billion to lose. Of course, Musk’s losses weren’t in cash but in Tesla stock, the equity that provides the majority of his (currently roughly $144 billion) net worth. When Musk decided to buy Twitter, he got the money, in large part, by selling Tesla stock. As far as anyone knows, when Musk has bought much of anything, he has gotten the money by selling Tesla stock.

For Musk, this was a good system when Tesla’s stock was at the moon. The electric carmaker was one of the biggest market winners of the early stages of the pandemic. The stock closed at $27.89 on the last day of 2019 and $235.22 on the last trading day of 2020, before topping $400 per share in November 2021. (The actual trading price was often higher than I’m saying, because Tesla split its stock 5-to-1 in August 2020 and 3-to-1 in August 2021.) Musk owns lots of Tesla; even after a round of selling in December, he reported owning about 424 million shares, or around 13 percent of the firm. While billions of people were struggling through the opening years of the pandemic, Musk was able to go to work as Tesla’s CEO, watch a line go up on a chart, and enjoy becoming the richest person alive. His net-worth graph looks more or less the same as a visual of Tesla’s share price.

Now things are less good. Tesla’s stock lost 65 percent of its value in 2022, equivalent to more than $700 billion and a much worse showing than the major stock market indices put up in a bad year for everyone. By the last weeks of the year, it was clear that Musk’s purchase of Twitter and subsequent management of the platform had been bad for Tesla’s share price and infuriating to many of Tesla’s investors. He had ensnared himself in one of the most expensive bag-fumbles in the history of human enterprise.

All of this, of course, raises the question of just how much of a future Twitter even has. The more you look into the situation with Twitter, the more grim the picture gets. There’s all the liability surrounding the privacy of users. What’s more is that there is the obviously low morale of whoever happens to be left to keep the lights on inside Twitter. Additionally, there the lawsuits that are already filed. Even worse is the fact that more lawsuits are brewing for a whole variety of reasons. This on top of Twitter basically burning it’s relationships with third party businesses in the process. Comically, that’s just a sample of Twitters problems.

There isn’t really a question by any sane people at this point. Musk is in way over his head. It’s not a question of if he is making really bad business decisions. the question now is just how many more bad decisions will come out of this. This not even mentioning how rough of a shape Twitter will be in when he leaves – assuming the platform even survives when Musk is done with it.

Drew Wilson on Twitter: @icecube85 and Facebook.

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