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Jack Dorsey surrenders to the hedge fund

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On Thursday, after Jack Dorsey’s first public comments since he was targeted by activist investor Ell
 
March 9 · Issue #469 · View online
The Interface
On Thursday, after Jack Dorsey’s first public comments since he was targeted by activist investor Elliott Management, I suggested that the real drama was just beginning. On some level, for reasons we’ll get into, this may be true. But on another level it was dead wrong. The fight some of us expected between Elliott and Twitter did not materialize. Instead, Twitter folded like a card table.
Twitter Inc. will appoint three new directors to its board and create a committee to review its leadership and governance, as part of an agreement with activist investor Elliott Management Corp. and private equity firm Silver Lake. The pact leaves Chief Executive Officer Jack Dorsey in place.
Silver Lake will also make a $1 billion investment in the social media company, which Twitter plans to use to fund part of its first ever share buyback, set at $2 billion.
The lone, notable concession there is that Dorsey will remain CEO … for now. Twitter now has two new independent board members — Elliott’s Jesse Cohn, who had been leading the company’s charge against Twitter, and Egon Durban, the co-CEO of Silver Lake. A third new board member is coming later.
Among the new board members’ tasks will be the formation of a committee “that will evaluate a succession plan with Dorsey.”
Twitter presented this news as a victory.
“Twitter serves the public conversation, and our purpose has never been more important. Silver Lake’s investment in Twitter is a strong vote of confidence in our work and our path forward,” Dorsey said in the statement.
“We welcome the support of Egon and Jesse, and look forward to their positive contributions as we continue to build a service that delivers for customers, and drives value for stakeholders,” he added.
To the extent that you consider Dorsey’s continuation critical to Twitter’s future, it is a victory. But there’s reason to believe that the victory could be short-lived.
Scott Galloway, a New York University professor, podcaster, and Twitter shareholder, had called for Dorsey’s ouster last year. In a (sadly broken) Twitter thread, he laid out his own view of what’s likely to happen.
Noting the lightning speed at which Twitter capitulated — giving up three board seats within five business days of the first reports that Elliott had targeted the company — Galloway speculated that the new investors would press their advantage. What might that mean? Hiring a recruiter to find a new CEO, goes one thought. Taking the company off the public market, goes another. “Silver Lake does not buy shares in tech firms, it takes them private,” Galloway tweeted. “This was first step toward that end.”
In the meantime, Dorsey’s board has given him aggressive new goals: growing its user base by at least 20 percent this year, accelerating revenue growth, and gaining market share as a digital advertiser.
Perhaps Dorsey will hit all those numbers and save his job. Twitter has, to its credit, been absolutely indispensable as a source of reliable information during the spread of COVID-19. Twitter shines when it’s amplifying high-quality news during times of crisis, and the past couple weeks it has largely lived up to its potential.
At the same time, the stock market suffered its biggest drop on Monday since 2008, prompting fears of a global recession. (Italy, the world’s eighth-largest economy, entered a mandatory lockdown for nearly all citizens.) Twitter may have the wind at its back from a product perspective, but the larger economic trends could be working against it.
And that’s why I think that, on balance, Elliott’s Twitter gambit is far from over. The barbarians once at the gate are now in the boardroom. And if the past five days are any indication, it may not be long before they’re running it.

The Ratio
Outbreak
On the misinformation front:
State Department officials are claiming that disinformation related to the coronavirus — including some pushed by Russia — is rampant across social media platforms like Facebook and Twitter. But the government seems cagey about reporting the details to the companies involved. (Rebecca Heilweil and Shirin Ghaffary / Recode)
Coronavirus misinformation is still spreading in some Facebook groups, despite the company’s larger crackdown on the content. Private groups present a particular challenge to content moderators on the platform. (Brandy Zadrozny / NBC)
Facebook is temporarily banning ads selling medical face masks. The company already prohibits people from making health claims about the coronavirus in product listings on the platform. (Kang-Xing Jin / Facebook)
On the travel front:
Facebook banned all non-essential business travel for employees. It also moved job interviews to video-conferencing due to coronavirus concerns. (Rob Price / Business Insider)
On the office front:
Apple is allowing most of its employees to work from home. CEO Tim Cook called the coronavirus outbreak an “unprecedented event” and a “challenging moment.” (Mark Gurman / Bloomberg)
Airbnb is also mandating work from home in the Bay Area. (Tyler Sonnemaker / Business Insider)
Y Combinator is hosting its 30th Demo Day online due to coronavirus concerns. The presentations will be pre-recorded and sent to investors on March 23rd.
Elsewhere:
Kang-Xing Jin is one of Facebook’s longest-serving employees — and now he’s leading the company’s coronavirus response. As the company works to contain misinformation about the virus, Jin — the company’s head of health — is getting more attention than usual. (Issie Lapowsky / Protocol)
Postmates is starting no contact deliveries to help reduce the spread of the coronavirus. Users are now being prompted to input a drop-off locations for their food and goods. (Nick Statt / The Verge)
Coronavirus isn’t deterring people from dating. In fact, Tinder has been popping. (Julia Reinstein / BuzzFeed)
Governing
Twitter put its new “manipulated media” label on a deceptively edited video of Joe Biden. White House social media director Dan Scavino shared the video, which was then retweeted by Trump. Here’s Cecilia Kang of The New York Times:
It was the first time that Twitter applied a policy announced in February against fake and misleading videos. Facebook, however, did not remove or flag the video as misinformation, angering the Biden campaign.
“Facebook’s malfeasance when it comes to trafficking in blatantly false information is a national crisis in this respect,” Greg Schultz, Mr. Biden’s campaign manager, said in a statement.
“It is also an unconscionable act of putting profit above not just our country, but every country,” he added. “Facebook won’t say it, but it is apparent to all who have examined their conduct and policies: They care first and foremost about money and, to that end, are willing to serve as one of the world’s most effective mediums for the spread of vile lies.”
Coronavirus misinformation is spreading rapidly around the world, despite an aggressive effort by social media companies to stop it. The key thing to focus on here, to my mind, is virality. I don’t worry that some people are posting misinformation. I worry if it gets to 1 million views. (Sheera Frenkel, Davey Alba and Raymond Zhong / The New York Times)
Tens of thousands of political ads on Facebook didn’t have key details about who paid for them, according to experts at New York University. The researchers discovered major gaps in Facebook’s ad archive that could “enable a malicious advertiser to avoid accurate disclosure of their political ads.” (Tony Romm and Isaac Stanley-Becker / Washington Post)
AT&T is cooperating with the Justice Department in the Google probe. The company has shared its position that Google is stifling competition in the advertising space. (Brent Kendall and Drew FitzGerald / The Wall Street Journal)
Internet shutdowns might seem like something that couldn’t occur in the United States, but if the president determines there’s a sufficient threat, they could happen. Jessica Rosenworcel, a member of the Federal Communications Commission, says we need to review Section 706 of the Communications Act, which gives the President these broad powers. (Jessica Rosenworcel / The Washington Post)
Australia’s information commissioner is suing Facebook over allegedly breaching the privacy of over 300,000 Australians caught up in the Cambridge Analytica scandal. The commissioner alleges data collected by Facebook was passed onto the This is Your Digital Life app by Cambridge Analytica for political profiling. (Josh Taylor / The Guardian)
Grindr’s Chinese parent company Kunlun is selling off the app for $608 million. The move comes after the Committee on Foreign Investment in the United States (CFIUS) asked Kunlun to divest from Grindr, citing concerns about how the company handles personal data. (Echo Wang, Chibuike Oguh / Reuters)
The Trump Administration also demanded that Beijing Shiji Information Technology divest from StayNTouch, a maker of hotel operational software. Trump said the StayNTouch acquisition could threaten US national security. (Sean O’Neill / Skift)
Industry
NBCUniversal quietly sold off its entire $500 million stake in Snap last year. As entertainment giants pour billions into new streaming services, they are taking a hard look at their portfolios. Alex Weprin at The Hollywood Reporter has the story:
As for NBCUniversal’s Snap investment, a NBCU source says the company is still committed to its Snap relationship, and is producing more programming than ever for the platform, including four daily shows slated to run on Snap during the 2020 Tokyo Olympics.
NBCU and Snap launched a joint venture, Indigo, in 2017, promising to create original scripted programming for Snapchat’s mobile audience with partners including Jay and Mark Duplass’ DBP Donut studio. NBC veteran Lauren Anderson ran the JV until she jumped to Amazon Studios, where she now oversees content for free streaming service IMDb TV.
The Indigo JV will continue, as will an advertising partnership between the companies. 
Amazon is working on a cure for the common cold. The top secret effort is called “Project Gesundheit.” (Christina Farr / CNBC)
TikTokers are going viral live-streaming themselves while they sleep. The trend is also popular on Twitch. (Taylor Lorenz / The New York Times)
Facebook appointed Nancy Killefer and Tracey T. Travis to its board of directors. Killefer has a background in the US government and Travis was CFO at Estée Lauder. (Facebook)
WhatsApp is the most popular social media platform in Africa. Its rise has spawned knock-off versions created by third-party developers. (Yomi Kazeem / Quartz)
Facebook’s VPN IP was banned from DoorDash because so many people were trying to order food while connected to the corporate network. It’s one of many unexpected issues of tons of people suddenly working from home. (Jacob Rossi / Twitter)
And finally ...
Wash Your Lyrics is “a new tool that automatically pairs the lyrics to a song of your choice with instructions on how to wash your hands properly,” Jon Porter reports.
When I went to use it today, the servers were overloaded. Perhaps you’ll have better luck.
In the meantime, wash those hands.
Talk to us
Send us tips, comments, questions, and survival strategies for Jack Dorsey: casey@theverge.com and zoe@theverge.com.
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