German trade union Verdi would oppose a cross-border merger for Commerzbank even if the bidder was not an Italian bank like UniCredit, an official said on Saturday, Reuters reports.
Berlin was taken aback by UniCredit’s swoop to build a large stake in state-backed Commerzbank, a move the Italian bank says could lead to a merger.
Officials told Reuters on Friday that Germany is working to frustrate a possible takeover that could tie Berlin’s fortunes to those of heavily indebted Italy.
“(Our opposition) is not due to the fact that (the bidder) is an Italian bank. It could be French or Spanish,” Frederik Werning, a Verdi labour union official and a member of the Commerzbank Supervisory Board, said in an interview with Italian broadcaster La7.
“When a merger happens every time, they say that nothing will change but one out of two times they don’t keep their promise, and jobs would be lost both in Germany and in Italy”.
The merging banks would for at least two years be preoccupied with integration at a time when Germany needs to boost investment, Werning added.
“If the takeover happens, UniCredit and Commerzbank will have to take care of themselves for years and they will no longer be strong partners for their clients, neither in Italy nor in Germany,” he added.
At the heart of Germany’s concern is UniCredit’s 40 billion euros ($44 billion) holding of Italian government bonds.
Commerzbank, which is smaller and financially weaker than UniCredit, also has billions of euros of Italian bonds.
A European Banking Union in the making
For a decade, European leaders have aimed to strengthen cross-border banking integration under a scheme named the Banking Union.
Under the union, banks can merge with others into creating larger ones that are less dependent on their home governments within Europe.
This is critical for boosting efficiency and reducing risks. The initiative is closely tied to the EU’s Capital Markets Union, as fragmented financial markets are seen as barriers to growth.
Former ECB President Mario Draghi highlighted this issue, noting that JPMorgan Chase is worth more than Europe’s top 10 banks combined.
Proponents like Karel Lannoo of CEPS believe mergers, such as UniCredit’s interest in Commerzbank, are necessary to unlock Europe’s financial potential.
However, German Chancellor Scholz opposes the deal, concerned about foreign influence, especially after UniCredit increased its stake.
Critics like Italian MEP Irene Tinagli argue that the Banking Union seems to benefit aggressive takeover strategies, leaving other banks vulnerable.
Credit ratings agency Fitch has revised France’s outlook to negative from stable on Friday, citing increases in fiscal policy and political risks.
“This year’s projected fiscal slippage places France in a worse fiscal starting position, and we now expect wider fiscal deficits, leading to a steep rise in government debt towards 118.5% of GDP by 2028,” Fitch said in a statement, while maintaining France’s rating at “AA-”
France’s public finances have sharply deteriorated this year as tax income fell short of expectations and spending exceeded them, leaving French debt at risk of a ratings downgrade.
The government presented a 2025 budget on Thursday that aims to reduce the hole in the public finances by €60 billion euros ($65.5 billion) through spending cuts and tax hikes focused on the wealthy and big companies.
“The 2025 budget that we just presented reflects the government’s determination to put the public finances on a better path and get debt under control,” Finance Minister Antoine Armand said in a statement.
Fitch said that high political fragmentation and a minority government complicate France’s ability to deliver on sustainable fiscal consolidation policies.
Russian businesses are facing increasing financial distress with a record increase in the number of companies going bankrupt at the start of 2024, the Russian business daily Kommersant reported on Thursday.
According to data from the Unified Federal Register of Bankruptcy Information (EFRS), 571 companies in Russia declared bankruptcy in January 2024 — a 57% increase from a year ago.
In February, a 61% increase in bankruptcies was observed compared to last year when 478 businesses did the same.
The increase at the beginning of the year is the first significant increase since early 2021. At that time, the number of corporate bankruptcies in Russia saw a 9.2 percent increase. The trend began to decline over the next 2 years before the recent surge.
Financial experts believe that this surge in bankruptcies was expected after Russia reversed a moratorium on such filings. In the wake of the COVID-19 pandemic, on April 1, 2020, Russia introduced an amendment to its Bankruptcy Law giving the government the authority to impose a temporary moratorium on the filing of bankruptcy petitions against certain legal entities and individuals if certain “extraordinary circumstances” exist.
Since then, Russia has imposed two moratoriums on bankruptcy filings. First prohibition was introduced to mitigate the impacts of the pandemic and was lifted at the back end of 2021.
However, just months later, Russia invaded Ukraine inviting coordinated economic sanctions from Western countries. On 1 April 2022, another moratorium was imposed for a period of 6 months that lasted till October of that year.
Russia’s first deputy economy minister, Ilya Torosov, told Kommersant that this signals a return to pre-pandemic levels.
A similar trend has been observed in the West where corporate bankruptcies increased rapidly last year after a cooling-off period. According to a report by the Financial Times, the number of corporate bankruptcies in the US increased by 30% owing to high rates and an end to COVID-19 aid.
Similar rates were observed in Europe with Germany seeing a bankruptcy increase of 25%, while in France, the Netherlands, and Japan, the increase remained above 30%.
Russia in a Worse Situation
While bankruptcy rates observed in Russia are twice that of their Western counterparts, the bigger problem for Vladimir Putin’s regime is the tightening of Western trade restrictions. There is little to no trade on the government level and secondary sanctions have hit companies doing business with the country.
The US embassy in Vienna announced on Wednesday that treasury official Anna Morris will this week warn Austria and Raiffeisen Bank International of the dangers of doing business in Russia.
Morris, who has focused on illicit money flows during her time in the office, will encourage banks in Austria to examine their Russian exposure and “take mitigation measures”.
The warning is part of a renewed push by Washington on sanctions enforcement.
Putin Looks for Answers
With one eye on the upcoming elections, Vladimir Putin has announced a new lifestyle improvement program promising Russians billions of dollars in healthcare and infrastructure improvements.
Putin’s plan could cost $130 billion more than the current budget and it remains unclear how Russia will manage those funds in a turbulent economy.
As per the Moscow Times, Putin is pondering over changes to the tax system that will allow Russia to get more out of high-income individuals and businesses.
“I propose to think through approaches to modernizing our fiscal system to more equitably distribute the tax burden towards those with higher personal and corporate incomes,” Putin said at his state-of-the-nation address on Thursday.
Even if Putin’s latest plan works out, it is difficult to see how it will generate enough funds to support a dwindling economy and a prolonged war effort.
It seems that Putin’s promises of lifestyle improvements are political shenanigans before Russia’s presidential election is set to take place on the 15 March.
Despite a torrent of economic challenges, Putin is expected to win the election and remain president for another six-year term.
The Body Shop, which runs more than 200 shops across the UK, has gone into administration just weeks after new owners took over operations of the cosmetics chain.
The owners have appointed accounting firm FRP Advisory to oversee the restructuring process.
The decision comes amid years of financial struggles and increasing competition in the UK market. According to the Financial Times, consumers had fallen out of love with The Body Shop with the company posting six consecutive quarters of losses prior to going into administration.
The insolvency experts from FRP Advisory will have to find a way to slash costs significantly, putting at risk thousands of people with jobs in the cosmetics chain.
“The Body Shop has faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector,” FRP said in a statement.
The Body Shop currently has 200 stores across the UK but almost half of those will now have to be closed to cut costs. This may lead to a loss of over 2000 jobs.
“Administrators will now consider all options to find a way forward for the business and will update creditors and employees in due course,” FRP added in its statement.
The Body shop went downhill since takeover
The decision to go into administration comes as a shock to many industry experts as European private equity firm Aurelius had just secured a £207m deal to buy The Body Shop from Brazilian cosmetics giant Natura & Co.
The deal was agreed way below the £500 million asking price and at about 20% of what Natura had paid Loreal in 2017.
The new owners had only taken over operations at the start of the new year, so a swift collapse wasn’t expected. In the weeks since the takeover, the retailer has also closed its “The Body Shop At Home” service, which had been struggling financially for quite some time.
According to Aurelius, the decision was necessary to save the future of the brand since the company had much lower working capital than initially thought. Sales over Christmas and in early January were also lower than expected which proved to be the final straw.
Aurelius has also sold many of the Body Shop’s European and Asian businesses to an unnamed investor. However, the insolvency proceedings will not affect the brand’s global operations which span 70 countries.
It should also be noted that while The Body Shop will cut down operations massively, it is unlikely that the brand will go completely out of business. This will only be a restructuring process where the administrators will try to capture younger consumers while also expanding their operations online.
The business will most likely be cut down to 100 stores with Aurelius being the front-runner to buy the curtailed operations. However, the administrators have made it clear that they have been in touch with other potential bidders.
The Body Shop was founded in 1976 and immediately gained popularity not just for its products but for how they were sourced. It became one of the first companies to promote ethical consumerism, where cosmetics and skincare products are produced without being tested on animals.
Over the next 3 decades, it became arguably the biggest cosmetics retailer in the UK. In 2006, the family business was bought by French beauty giant L’Oreal in a £650 million deal. Sales started to drop in the years that followed due to increasing competition in the sustainability, and natural beauty space.
While the business will survive for now, the decision to move into administration comes as a major blow to the chain’s workforce and loyal customer base.
In a strong finish to the year, Travelers Companies announces a significant increase in fourth-quarter profit on Friday, sending its stock 6.7% higher at market close.
Travelers credits the record-breaking profits to a combination of higher underlying underwriting gains, lower catastrophe losses, and higher investment returns.
The insurer’s net income surged to $1.63 billion for the quarter ended 31 December 2023, doubling from $819 million, in the same period the previous year.
Underwriting Performance
The insurer’s combined ratio, a key metric that measures profitability, showed remarkable progress, decreasing from 94.5% to 85.8%.
A combined ratio below 100% indicates that the insurer earned more in premiums than it paid out in claims. This reduction in the combined ratio underscores Travelers’ ability to effectively manage risk and control expenses.
Cat Losses & Reinsurance
The insurer’s catastrophe losses, net of reinsurance, dropped to $125 million, which is a substantial decline from $459 million in the year-earlier period.
Catastrophe losses primarily resulted from wind and hailstorms in multiple states, as well as a winter storm.
This decrease in catastrophe losses reflects Travelers’ enhanced risk management strategies in addition to recent quota share reinsurance agreement with subsidiaries of Fidelis Insurance Holdings.
Reinsurance plays a crucial role in managing catastrophe risks for insurance companies. By transferring a portion of their risks to reinsurers, insurers can protect their balance sheets and enhance their ability to absorb losses.
Travelers’ Investment Returns
Travelers‘ investment portfolio also played a significant role in bolstering its fourth-quarter profits. Net investment income increased by 24% to $778 million from $625 million a year earlier.
This surge in investment returns can be attributed to favorable market conditions, including a rally in US equity markets and robust gains across investment portfolios.
The Federal Reserve’s indication of potential interest rate cuts in 2024 spurred a rally in US equity markets, with the benchmark S&P 500 closing approximately 24% and reaching record highs.
This positive market sentiment extended to other asset classes, benefiting Travelers’ investment portfolio, and contributing to its strong financial performance.
Full-Year Performance
Besides, Travelers’ impressive financial results extend beyond the fourth quarter. The company reported a full-year core income of $3.1 billion, underscoring its resilience and strong business fundamentals.
Travelers’ CEO Alan Schnitzer
“We are also pleased to have delivered full-year core income of $3.1 billion … notwithstanding elevated industry-wide catastrophe losses and an operating environment for our personal insurance business that, while improving, was difficult during the year,” CEO Alan Schnitzer said in a statement.
The Board of Directors declared a regular quarterly dividend of $1.00 per share.
US ecommerce giant Amazon doesn’t have to pay a €250 million euros (roughly $270 million) penalty in back taxes after a favorable ruling from the EU’s top court.
In a press release on Thursday (14 December), the European Court of Justice (ECJ) upheld the General Court decision that Amazon did not benefit from an undue reduction in its tax burden.
The decision lands a significant blow to the European Commission’s efforts to curtail favorable tax deals between member states and big companies. The 27-member bloc had hoped that stricter tax regulations would push corporations to pay more and assist post-pandemic recovery plans.
The Court of Justice says that the Commission had incorrectly defined the “reference system” of laws that applied to the situation and that certain EU rules weren’t part of Luxembourg’s national tax code.
The court concluded that “the Commission decision had to be annulled in any event.”“The Court of Justice confirms that the commission has not established that the tax ruling given to Amazon by Luxembourg was a state aid that was incompatible with the internal market,” the court further said in its statement.
The ruling on Thursday is final and cannot be appealed against.
Amazon heralded the ruling as a landmark victory that acquits the company of any tax avoidance charges.
“We welcome the Court’s ruling, which confirms that Amazon followed all applicable laws and received no special treatment. We look forward to continuing to focus on delivering for our customers across Europe,” said an Amazon spokesperson.
EU ruling impacts
The ruling can potentially hurt EU competition commissioner Margrethe Vestager’s increasing efforts to crack down on internal tax havens in the EU. Ever since Vestager was appointed, deals between individual countries and companies looking to establish their EU headquarters have come under increased scrutiny.
The case against Amazon dates back to 2017 when Vestager charged Amazon with unfairly profiting from special low tax conditions in Luxembourg. The European Commission argued that Luxembourg allowed Amazon to shift profits to a tax-exempt company and ordered Amazon to repay €250 million in unpaid taxes.
“Luxembourg gave illegal tax benefits to Amazon. As a result, almost three quarters of Amazon’s profits were not taxed,” Vestager told Reuters at the time.
Amazon and Luxembourg challenged the Commission’s decision before the EU’s lower court, the General Court, that same year.
After lengthy deliberations, the General Court ruled in Amazon’s favor in 2021. The court annulled the EU Commission’s decision because they could not prove that Luxembourg had granted a “selective advantage” in favor of Amazon.
The Commission then submitted an appeal against the ruling to the European Court of Justice.
The decision by the European Court of Justice comes days after another loss for the EU in a similar dispute. Earlier this month, French utility Engie won a court battle against an EU order to pay €120 million in back taxes to Luxembourg.
These decisions may set the precedent for other tax disputes between the EU and mega-corporations. Most notable are the Commission’s efforts to make Apple pay €14.3bn in tax to Ireland. The ECJ is expected to make a decision in that case by March next year.
The Amazon case is C-457/21 P Commission v Amazon.com and Others.
The world’s largest cryptocurrency exchange, Binance.com, has pleaded guilty to multiple federal charges and has agreed to pay over $4 billion, according to the US Department of Justice press release.
The investigation into Binance related to the Bank Secrecy Act (BSA), failure to register as a money-transmitting business, and the International Emergency Economic Powers Act (IEEPA).
Binance’s founder and CEO, Changpeng Zhao (CZ), has also pleaded guilty to failing to maintain an effective Anti-Money Laundering (AML) program and has resigned as CEO of Binance. He will pay a $200 million fine of his own.
It is the biggest-ever corporate resolution that includes criminal charges for an executive.
“Binance became the world’s largest cryptocurrency exchange in part because of the crimes it committed – now it is paying one of the largest corporate penalties in US history,” said Attorney General Merrick B. Garland.
Binance’s list of criminal charges is long
Founded in 2017, Binance focused on attracting high-volume customers around the world and quickly became the largest cryptocurrency exchange in the world.
Binance customers are mostly US citizens which meant that the exchange was subject to several regulations. Binance was required to register with the Treasury’s Financial Crimes Enforcement Network (FinCEN) as a money service and implement an effective AML program to prevent money laundering through the platform.
However, Binance did not implement comprehensive Know-Your-Customer (KYC) protocols or systematically monitor transactions. Binance never filed a suspicious activity report with FinCEN and allowed users to open accounts and trade without submitting any identifying information except for an email address.
Due to lax security protocols, between August 2017 and October 2022, US users conducted trillions of dollars in transactions on the platform, generating over $1.6 billion in profit for Binance.
Binance also needed to implement controls that would prevent US customers from conducting transactions with customers in sanctioned jurisdictions, such as Iran.
But despite knowing that the system it used to match customers for transactions would cause forbidden transactions, Binance failed to take any remedial steps.
Because of this intentional failure, between January 2018 and May 2022, over $898 million were exchanged in trades between US users and residents in Iran.
“Binance turned a blind eye to its legal obligations in the pursuit of profit. Its willful failures allowed money to flow to terrorists, cybercriminals, and child abusers through its platform,” said Secretary of the Treasury Janet L. Yellen.
Binance agrees guilty plea settlement
As part of the plea agreement with the Department of Justice, Binance has agreed to forfeit over $2.5 billion and to pay a criminal fine of over $1.8 billion. Binance separately has also reached agreements with the Commodity Futures Trading Commission (CFTC), FinCEN, and Office of Foreign Assets Control (OFAC).
Deputy Attorney General Lisa O. Monaco said that the charges, guilty plea, and the financial penalty “sends an unmistakable message to crypto and DeFi companies” that you must obey US laws if you serve US customers.
Changpeng Zhao, Binance’s founder and CEO, admitted that he understood that Binance was required to register with FinCEN and implement an effective AML program. However, he told employees it was “better to ask for forgiveness than permission,” and prioritized Binance’s growth over compliance with US laws.
Zhao has agreed to a separate plea deal with the prosecutors. He will pay a fine of $50 million. In addition to the criminal fine, Zhao will pay $150 million in civil penalties.
Zhao is stepping down from his role as CEO of Binance. He announced on X that Binance’s former global head of regional markets, Richard Teng, would be immediately taking over.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.
Binance is no longer a baby. It is…
— CZ 🔶 BNB (@cz_binance) November 21, 2023
The former chief faces a maximum of 10 years behind bars, though his ultimate sentence will likely be far lower. Despite the criminal proceedings, Zhao will keep his majority share of Binance. However, he won’t be allowed to be an executive within the company.
“While Binance is not perfect, it has strived to protect users since its early days as a small startup and has made tremendous efforts to invest in security and compliance,” the company said in a statement Tuesday.
Zhao’s guilty plea makes him the second high-profile cryptocurrency exchange CEO to be prosecuted in recent weeks. Earlier in November, a New York federal court jury found Sam Bankman-Fried guilty on seven charges of fraud and conspiracy.
US authorities hope that the guilty pleas of high-profile people will bring some order to the volatile crypto industry.
Italy’s financial police on Monday seized more than $835 million from accommodation-sharing service Airbnb for alleged tax evasion, according to a report from Reuters.
It is the latest sign of the increasing scrutiny of short-term rentals like Airbnb in Europe and the United States.
A judge in Milan authorized the seizure after the company failed to comply with laws requiring Airbnb to pay Italian tax authorities 21% of landlords’ rental income in the country. The seizure order covers the period from 2017 to 2021.
Airbnb spokesperson Christopher Nutly said that the firm had been working to resolve the matter with the tax authorities since June.
“We are surprised and disappointed at the action announced by the Italian public prosecutor on Monday,” said Christopher Nulty. “We are confident that we have acted in full compliance with the law and intend to exercise our rights with respect to this issue.”
As a part of the tax probe, prosecutors in Milan are also investigating three people who held managerial roles at Airbnb from 2017 to 2021.
Under a 2017 law, landlords in Italy must forward information from their rental contracts to tax authorities and withhold 21% from the rental income, and pay it to tax authorities.
Airbnb unsuccessfully challenged the law in 2022 arguing that Italy’s tax requirements for short-term rental providers violate the European Union’s principle of freedom to provide services across the 27-country bloc.
The Court of Justice of the European Union (CJEU) later ruled that member states were free to collect income taxes from short-term rental platforms.
“EU law does not preclude the requirement to collect information or to withhold tax under a national tax regime,” the court said in a statement.
The law also provides that non-resident persons who do not have a permanent establishment in Italy are obliged to appoint, in their capacity as persons liable to pay the tax, a tax representative.
In its ruling, the top EU court disagreed with this obligation.
“However, the obligation to appoint a tax representative constitutes a disproportionate restriction on the freedom to provide services”, the court added.
Airbnb continues to contest the law calling it “inherently complex and uncertain” while maintaining that it is not subject to it.
Italy declares war on tax dodgers
The move to seize Airbnb funds is the latest in a series of efforts by Italian and European authorities to crack down on the tax practices of global companies.
In 2019, Italian prosecutors probed Netflix Inc. after the US streaming company failed to file a return. Netflix later agreed to pay more than $59 million to settle the tax dispute related to penalties and interest from October 2015 through 2019.
Earlier this year, Milan prosecutors started investigating Facebook owner Meta Platforms in a similar tax probe that can turn up a $925 million tax bill.
The latest move to go after Airbnb for alleged tax evasion had been expected. Towards the end of last month, Italy announced a crackdown on landlords who did not pay taxes on short-term rentals through platforms like Airbnb.
The co-ruling Forza Italia party said the country would move to introduce a national identification code for short-term rentals, a move that could boost revenues by 1 billion Euros.
“That code will bring out the revenue of those who rent flats without declaring them. This will lead to more money in the state coffers which will go to reduce the tax burden,” Deputy Prime Minister and Forza Italia leader Antonio Tajani told reporters.
Italy is not the only country to clamp down on Airbnb. Countries like Malaysia, Austria, and the US have all put restrictions on similar businesses in recent months.
The platform, which enables people to rent out their homes or spare rooms to tourists, has been accused of inflating house prices, pushing out locals, and fueling overtourism.
Helvetia Global Solutions has received confirmation from UK regulators that its authorization to underwrite non-life insurance business in the UK has been approved and comes into effect on 1 November 2023.
The authorization includes the underwriting of international risks in the specialty lines business, such as General Aviation and Marine business.
The opening of the branch is in response to Brexit, where UK business can only be underwritten on a freedom of services basis until 31 December 2023.
Helvetia already offers very successful specialty lines cover in the UK thanks to experienced underwriting teams that was previously in place. The regulatory approval will allow the insurer to continue the business.
Helvetia has appointed Marc Davis as CEO of the UK branch, who joined the company on 1 October 2022 and holds extensive experience in the insurance industry.
He has previously served as Country Manager UK and Ireland for Swiss Re Corporate Solutions, as Commercial distribution director at RSA, and as head of sales & marketing at Marsh’s IRM division in the UK.
David Ribeaud, CEO, Specialty Markets of Helvetia Group commented, “With Marc Davis, we have gained a very experienced professional who will support the successful establishment of the UK branch as well as the assessment of local business opportunities in the UK in alignment with our strategy.”
As of year-end 2022, Helvetia Global Solutions’ gross written premiums (GWPs) were around EUR 508 million. The insurer manged to generate a profit of EUR 6.9 million which is an 65% significant increase compared to the previous year.
Partner-business and GEPS (Global Engineering & Property Solutions) segments were the most lucrative generating each more than 40% of the profits.
The projected specialty lines premium volume of the UK branch for 2023 amounts to around EUR 50 million.
Helvetia has an “A” rating with stable outlook from S&P Global Ratings (S&P). The rating also applies to the UK branch.
Social media platform X, formerly known as Twitter, has started testing a new subscription method for new users in two countries, the company said on Tuesday.
The new model is dubbed “Not a Bot” under which new users in New Zealand and the Philippines will be charged a $1 USD annual fee for basic features. This includes features such as Liking and Bookmarking posts, Replying, Reporting, or Quoting other accounts.
New users who don’t get the paid subscription will only be able to take “read-only” actions, such as: Read posts, Watch videos, and Follow accounts.
X also said that the model was developed to combat bots and spammers while improving the user experience as a whole.
“This new test was developed to bolster our already successful efforts to reduce spam, manipulation of our platform, and bot activity, while balancing platform accessibility with the small fee amount. It is not a profit driver,” the company said.
New accounts in the two countries will also be required to verify their phone number. A move that has raised eyebrows amid privacy concerns. This can also be a step towards making X an “everything app” – an idea Elon Musk, the owner of X, has floated for a long time.
Musk was quick to tweet about the change, writing: “Read for free, but $1/year to write. It’s the only way to fight bots without blocking real users. This won’t stop bots completely, but it will be 1000X harder to manipulate the platform.”
“Not a Bot” is a beta program with varying fees from country to country based on the exchange rate. It remains unclear if, or when, the payment plan will be expanded to users in other countries.
Elon Musk first talked up the idea of a small monthly payment when he met with Israeli Prime Minister Benjamin Netanyahu last month.
He said that bots cost “a fraction of a penny” to set up, but their effective cost on the platform is very high.
“A new payment method every time you have a new bot”, Musk told Netanyahu.
It should be noted that the program is different from X Premium, which offers users a blue verification tick with extra features like “undo” and “edit” for posts. The service is available for $8 USD a month to most users. However, the service has so far failed in curbing spam. If anything, the launch of a premium subscription turned out to be a mini disaster as several bots paid for verification badges.
Is X new subscription model a profit driver?
Ever since Elon Musk took over Twitter, the company has struggled for revenue sources. Many advertisers have ended their partnership with X due to concerns over hate speech and the loosening of content moderation efforts.
By Elon Musk’s own admission, ad revenue has since declined by over 50% and the company has struggled to break even. Elon Musk and his team need to make up for these losses and pay off a $13 billion debt acquired to buy Twitter.
It seems like this latest move is aimed at making up some of the losses incurred over the last year. Musk has since roped in former advertising executive Linda Yaccarino as CEO of X, however, it seems that the two of them are yet to agree on a coherent strategy to halt plummeting revenues. As Elon Musk talks up subscription-based models, Yaccarino seems focused on bringing back advertisers.
Launching “Not a Bot” means that X now has three different subscription plans on offer: the X Premium plan for roughly $8 to $11, and a $1,000 per month Verified Organizations plan that allows companies to verify their employee accounts.
