Twitter, a popular social media platform, has been accused of failing to pay over $10 million to various vendors. Small businesses that provide services ranging from public relations advice to branded merchandise are among the vendors that claim that Twitter has failed to pay them. At least 10 vendors have sued Twitter on similar grounds since December, with four vendors filing a joint lawsuit for breach of contract in April. These small businesses depend on Twitter's payments to continue operating, and their claims against the company are creating an enormous cash flow burden.
One of the vendors that joined the lawsuit in April is White Coat Captioning, a small business based in the UK that provides captioning services for Twitter's global events. According to Chief Executive Officer Norma Miller, Twitter stopped paying the company in October 2021, about two weeks before Elon Musk officially took over the company. Despite his personal net worth of over $150 billion, Musk has not addressed the outstanding debts owed to the vendors.
Other vendors, such as Miami-based public relations firm Cancomm LLC, which is owed $140,000 by Twitter, have also reported that Twitter approved their invoices but never paid them. The vendors claim that the delayed payments appear to be related to Musk's chaotic leadership, citing the abrupt shift in the company's behavior since he purchased it. Musk has emphasized repeatedly that the company had only a few months to live when he first purchased it and has painted himself as a savior, firing unproductive employees, cutting unnecessary costs, and developing a business model that will make it sustainable.
However, much of Twitter's financial trouble is Musk's own doing. As part of his $44 billion deal to buy the company, he saddled it with over $12 billion of debt, and Twitter will owe about $1.2 billion in interest payments per year. Advertising revenue has declined by 50% since Musk took over, and his subscription service, Twitter Blue, has failed to draw users. Less than 1% of Twitter's monthly users have signed up, and advertisers are concerned about how Musk's behavior could damage their reputation.
It remains unclear to what extent the behavior alleged in the lawsuits is related to Musk's plan to bring Twitter back to financial health. While Twitter has paid or settled with some of its vendors in recent months, the outstanding debts and delayed payments are creating a significant cash flow burden for the small businesses that rely on Twitter's payments to continue operating.