Hannah Murphy in San Francisco

Mark Zuckerberg has laid out plans to further wrestle Meta’s costs under control in what he deemed a “year of efficiency” for the social media company, as its shares jumped on better than expected sales, guidance for lower expenses and a new $40bn share buyback.

Meta, which owns Facebook, Instagram and WhatsApp, reported fourth-quarter revenues of $32.2bn on Wednesday, a 4 per cent decline from the year before, but at the top end of its guidance and slightly above analysts’ estimates.

The company also cut its 2023 expenses outlook by $5bn and announced an additional $40bn for share buybacks.

Meta shares jumped about 19 per cent in after-hours trading. If that gain holds, it would add about $76bn to its market value, according to Bloomberg data, largely reversing the $89bn hit at its third-quarter results amid investor anxiety over its costly metaverse bet.

The fourth-quarter results present a rosier picture for Meta, which has been squeezed over the past year by the economic slowdown that prompted marketers to cut their spending, along with heightened competition from TikTok and challenges in tailoring and measuring ad campaigns following Apple’s privacy changes.

Still, its profits took a substantial knock in the quarter, which its blamed on a restructuring cost of $4.2bn in the quarter related to facilities consolidation, job cuts and the cancellation of multiple data centres. Net income in the fourth quarter dropped 55 per cent to $4.7bn, compared with consensus estimates for a drop to $6bn.

At the start of the call with investors, an upbeat Zuckerberg said his “management theme for 2023 . . . is the year of efficiency”. He said Meta was now focusing on removing some layers of middle management, cutting low-performing projects and deploying artificial intelligence tools to help its engineers be more productive.

“There’s going to be some more that we can do to improve our productivity, speed and cost structure,” Zuckerberg said. “2022 was a challenging year. But I think we ended up having made good progress on our main priorities and setting ourselves up to deliver better results this year, as long as we keep pushing on efficiency.”

Meta, which had expanded its headcount rapidly since the start of the coronavirus pandemic, has sought to bring down costs as Wall Street has increasingly questioned its lossmaking efforts to build an avatar-filled digital world known as the metaverse.

As with its many other virtual and augmented reality projects, they are not expected to generate returns for many years. In the fourth quarter, revenues from Reality Labs, its metaverse unit, fell to $727mn from $877mn a year ago, while losses were $4.3bn compared with $3.3bn the prior year.

In November, Meta announced its biggest headcount reductions, dismissing 11,000 staffers, or about 13 per cent of total employees. It also introduced other measures such as reducing budgets and employee perks, and shrinking its “real estate footprint”.

On Wednesday, the company forecast revenues for the current quarter of between $26bn-$28.5bn. It also anticipates 2023 expenses in the range of $89bn-$95bn, down from the prior outlook of $94bn-$100bn, because of “slower anticipated growth in payroll expenses and cost of revenue”.

It expects a further $1bn in restructuring charges, down from a previous estimate of $2bn.

On the call with analysts, Zuckerberg said the company’s investment in AI was paying off, allowing it to recommend more relevant short-form video content to users for its so-called Reels feature, as well as helping brands to better automate, target and measure their marketing campaigns.

He also said he hoped Meta would become “a leader” in generative AI, a fast-emerging technology that can be used to produce novel content such as graphics or literature. “You’ll see us launch a number of different things this year,” Zuckerberg said.

Meta’s growing user base also remained a bright spot. Monthly active users on one or more of its apps rose 4 per cent to 3.74bn in the fourth quarter, while user numbers for the Facebook app specifically rose 2 per cent to 2.96bn.

Lloyd Walmsley, analyst at UBS, said in a note that he could “see a path towards double-digit [revenue] growth” come the end of 2023, as well as strong growth in earnings per share. “These results show significant improvement around key overhangs and . . . shares are under-owned by long-term investors in our view.”

Additional reporting by Nicholas Megaw

Twitter has begun applying for regulatory licences across the US and designing the software required to introduce payments across the social media platform, as Elon Musk searches for new revenues to turn round the business.

Esther Crawford, a fast-rising lieutenant to Musk inside Twitter, has started to map out the architecture needed to facilitate payments on the platform with a small team, said two people familiar with the company’s plans.

The nascent moves to allow payments through the site are a critical part of Musk’s plan to open up fresh revenue streams. Twitter’s $5bn-a-year advertising business has cratered since he bought the platform for $44bn in October, with marketers citing concerns over its management and content moderation.

Musk has said he wants Twitter to offer fintech services such as peer-to-peer transactions, savings accounts and debit cards, as part of a master plan to launch an “everything app” that incorporates messaging, payments and commerce. In 1999, Musk co-founded X.com, one of the first online banks, which later became part of payments giant PayPal.

Crawford’s team is forging ahead, including devising a vault for storing and protecting the user data that would be collected by the system, said two people with knowledge of the team’s efforts.

Twitter is also pushing forward with the regulatory checks needed before launching a payment service. In November, Twitter registered with the US Treasury as a payments processor, according to a regulatory filing. It had now also begun to apply for some of the state licences it would need in order to launch, these people said.

The remainder would be filed shortly, in the hope that US licensing was completed within a year, one of the people said. Then the company would seek to expand to gaining regulatory approvals internationally, they added.

While Twitter had set up a subsidiary, Twitter Payments LLC, in August last year before Musk took over the company, Musk recently appointed Crawford, Twitter’s director of product management, as the chief executive of Twitter Payments.

But delivering on Musk’s vision will require taking on new technological challenges, significant compliance burdens and winning consumer trust.

It is also likely to be costly: late last year, Musk approached Twitter’s equity investors in an attempt to raise more capital, indicating that some of the money would be used to fund a “hiring spree” of programmers to build a “super app” that could process payments, said one investor who received the offer.

Prior to Musk’s takeover, Twitter had been exploring some payments features around tipping creators and ecommerce.

Musk’s vision goes far beyond that, including exploring more ways for users to reward creators directly, for users to buy items directly through the platform and for users to pay one another, according to three people familiar with the plans.

Musk has said he wants the system to be fiat, first and foremost, but built so that crypto functionality could potentially be added at a later point, two people said.

In an early pitch deck to investors in the acquisition deal in May, seen by the Financial Times, Musk said he aimed for Twitter to bring in about $1.3bn in payments revenues by 2028. The pitch deck was first reported by the New York Times.

Data from payments markets data group FXC Intelligence show hundreds of thousands of Twitter users share links to third-party payments options either in their tweets or on their account. “Twitter is already a platform on which payments happen, so it’s kind of a no brainer,” said Lucy Ingham, head of content at FXC Intelligence.

Other payment experts have questioned whether Twitter can achieve a competitive scale, particularly in the US where there is stiff competition in the space from groups such as Venmo, Cash App and Zelle.

Twitter will also face high levels of regulatory scrutiny. The move into payments comes after Musk has culled more than half of the platform’s employees, which has raised fears that its compliance staffing is insufficient.

Businesses involved in money transfers, currency exchange or cashing cheques are required to alert unusual activity to authorities.

As part of monitoring for fraud and suspicious transactions, user accounts have to be directly linked to a user’s identity, according to Lisa Ellis, payments expert and senior equity analyst at research company MoffettNathanson.

Such regulations mean “many [tech companies] experiment and then give up”, she said. “They find it to be a burden to ultimately bear the long-term investment and risk — where you can get fined if there’s an issue and you have to have a whole compliance infrastructure that has to be constantly licensed.”

Days after Elon Musk had completed his $44bn buyout of Twitter, Esther Crawford shared a picture of herself sleeping on the floor of the social media company’s headquarters.

Wrapped in a sleeping bag, eye mask on, she added a caption to the viral post from November 2: “When your team is pushing round the clock to make deadlines sometimes you #SleepWhereYouWork”.

Crawford, Twitter’s director of product management, has according to current and former staff risen to become among the most influential leaders left from the old guard before Musk fired more than half the social media group’s workforce of 7,500, including most of its top executives.

The 39-year-old has done so, say people close to the company, by embodying the “hardcore” vision that Musk seeks to instil across his other companies such as Tesla and SpaceX where there is an expectation of working long hours “at high intensity”.

That has enabled her rapid ascent to lead its new moneymaking initiatives, such as the Twitter Blue subscription service and its nascent plans to allow payments through the site.

Crawford has also become one of the few women at the company to join Musk’s trusted lieutenants — a rise marked by her regular gushing posts online about the new Twitter, alongside self-improvement or management quotes.

To some insiders, Crawford has the charismatic energy needed to help transform Twitter’s flailing business, while being a sensible voice who has the ear of its impulsive owner. To other employees, she is reviled as a sycophant and opportunist.

When your team is pushing round the clock to make deadlines sometimes you #SleepWhereYouWork https://t.co/UBGKYPilbD

— Esther Crawford ✨ (@esthercrawford) November 2, 2022

“The sleeping bag incident really bothered people,” said one senior staffer who added Crawford has become one of few so-called Twitter 1.0 employees to successfully translate Musk’s demands to others under his ownership. “She has become a bit of an interpreter between Elon and the product team,” the person said.

Crawford declined to comment. Musk did not respond to a request for comment.

When Musk first came to the San Francisco headquarters just before the deal closed, Crawford introduced herself in the Perch, Twitter’s on-site coffee shop, and secured a one-on-one meeting to discuss her ideas around payments and creators, according to multiple people familiar with the encounter.

For Musk, as one of the biggest creators on the platform with 126mn followers, her ideas resonated. Other people were irked; Crawford was reprimanded by a more senior leader for going above their head directly to Musk, according to people with knowledge of the company’s operations.

Under Musk, who has sought to diversify revenues away from the reliance on advertising, Crawford led the introduction of Twitter Blue, its $8 premium subscription service, which guarantees users a verified “blue tick”.

It eventually got off the ground late last year after several hiccups, with Crawford conceding: “There are no sacred cows in product at Twitter anymore. Elon is willing to try lots of things — many will fail, some will succeed.” 

In the longer term, she is charged with Musk’s ambitious plan to facilitate peer-to-peer transactions, together with ecommerce payments, on the platform and was appointed chief executive of its subsidiary Twitter Payments, according to multiple people familiar with the matter and first reported by Platformer.

Crawford first joined Twitter in late 2020, when the company bought Squad, the video chat start-up she founded, as the coronavirus pandemic took hold. On her LinkedIn profile, she said the app had “millions of users” and funding from seed-stage venture firms including First Round Capital.

Prior to that, she was herself an early YouTube video blogger and invited to be the lead social media strategist for Weight Watchers in the late 2000s after launching her own successful weight loss video blog.

A philosophy graduate with a masters degree in international relations, she also held product marketing roles at several Silicon Valley start-ups, and became an avid Twitter user, posting personal reflections on her life growing up in a Christian “cult” and the timing of her contractions as she gave birth.

I grew up in a cult. We had lots of rules (can’t cut hair, no makeup, no pants, no tv, no secular music, etc) and hierarchical leadership. We believed it was the “end times” so I lived in fear of doing anything wrong & being left behind. I exited on my own when I was 19. https://t.co/t6u7VlJE0T pic.twitter.com/0EzfqBICbA

— Esther Crawford ✨ (@esthercrawford) April 16, 2022

On joining Twitter as an employee, she would be responsible for finding ways for influencers to make money from the platform, and exploring opportunities around crypto, as head of its early-stage bets.

Initially, she directed research into what creators want from the platform, according to two colleagues, one of whom said the results were “sobering” because the company had failed to adequately cater to creators by this point. Crawford then worked on plans to address their demands, which included focusing on the audio feature Spaces, one of Twitter’s most successful updates, and on creator subscriptions.

Several current and former colleagues describe her as empathetic and diplomatic: her calendar is typically open for all to see, and she buys customised mugs for team members. Her charm, combined with a start-up mentality, has earned her Musk’s trust, according to three people who have worked with her, one of whom said that she was able to influence him by challenging him tactfully behind closed doors rather than publicly.

Crawford was responsible for smoothing tensions over at Apple, two of the people said, including after Musk publicly harangued chief executive Tim Cook over fees the tech group charges developers of its app store.

Her ideas have not always been welcomed. Crawford was among the proponents for Twitter’s controversial and now-halted plan to introduce a feature that would allow users to offer videos of adult content behind a paywall similar to that posted on subscriptions site OnlyFans, according to two people familiar with the matter.

Many former staffers, meanwhile, resent her embrace of the spotlight. She regularly posts a mix of Twitter business updates and inspirational corporate speak to her 50,000 followers.

One former senior staffer described her as “bootlicking”, adding: “She was a nobody who became somebody because she was willing to sell her soul for her 15 mins of fame. It’s gross.” It remained to be seen whether Twitter engineering teams would respect her given she was not a coder, said another current colleague.

Crawford appears unfazed. On her Twitter profile, the background photograph reads: “Be bold. Get back up. Believe in yourself.”

Elon Musk has launched a Twitter poll asking users if he should step down as head of the social media platform and pledged to honour the result, after a backlash to a new policy banning the promotion of accounts on rival platforms.

The billionaire entrepreneur, who bought Twitter for $44bn in October and is its chief executive, wrote to his 122mn followers on Sunday night: “Should I step down as head of Twitter? I will abide by the results of this poll.”

Musk later tweeted: “No one wants the job who can actually keep Twitter alive. There is no successor.”

The poll is open for 11 hours and with eight hours left, more than 8mn had voted, with 57 per cent in favour of him stepping down and 43 per cent against.

The move comes after Twitter announced earlier on Sunday a new policy banning users from sharing links to their accounts on rival platforms, including Mark Zuckerberg’s Facebook and Instagram, as well as emerging Twitter rival Mastodon, Donald Trump’s Truth Social, plus Tribel, Nostr and Post.

“We know that many of our users may be active on other social media platforms; however, going forward, Twitter will no longer allow free promotion of specific social media platforms on Twitter,” the company said in a post.

Initial offences could result in temporary suspensions or a requirement to delete the offending tweet, but repeat offenders risk permanent suspension, it said.

“Twitter should be easy to use, but no more relentless free advertising of competitors. No traditional publisher allows this and neither will Twitter,” Musk said on the platform earlier on Sunday.

However, the policy sparked immediate criticism from Musk’s detractors and even some of his high-profile Silicon Valley allies for being too restrictive.

The SpaceX and Tesla chief executive then responded by saying that the policy would be “adjusted” so that suspensions would only apply “when that account’s primary purpose is promotion of competitors”.

In a separate tweet, he wrote: “Going forward, there will be a vote for major policy changes. My apologies. Won’t happen again.”

The move is the latest shake-up since Musk took the helm, firing around half of its staff, cutting costs and overhauling its verification and moderation processes.

It comes two days after Musk also suspended several high-profile US journalists from Twitter, suggesting they fell foul of a recently created policy on sharing location information. The journalists, including Ryan Mac of the New York Times and Donie O’Sullivan of CNN, have since been reinstated. On Friday, EU and UK politicians expressed concern over the suspensions and press freedom.

Sunday’s policy change drew scrutiny from some of Musk’s supporters in Silicon Valley including former a16z partner Balaji Srinivasan, who wrote: “This is a bad policy and should be reversed. The right way to compete is to build a better product, not to restrict the use of your product.”

Meanwhile, Paul Graham, the founder of the Y Combinator start-up incubator who had previously praised Musk as he took over Twitter, wrote: “This is the last straw. I give up”, before adding that his website had a link to his Mastodon account. He was then suspended from the platform for the tweet.

Jack Dorsey, Twitter’s former chief executive who invested in one of the banned platforms Nostr, tweeted that the policy “doesn’t make sense”. 

Other critics argue that the move is likely to be unpopular among creators, most of whom have built up audiences across multiple platforms, and is at odds with Musk’s pledge to be a free speech proponent. Musk has brought back accounts that were permanently banned under the previous leadership, such as that of former US president Donald Trump.

Experts also warn that the policies could draw scrutiny from EU and US regulators. “These [policies] are clearly anti-competitive . . . as they seem to prevent communication across consumers comparing competitors,” said Pinar Yildirim, associate professor of economics and marketing at the Wharton School of the University of Pennsylvania.

Before Sunday’s policy was announced, many Twitter users attempting to share links to their own Mastodon profiles were prevented from doing so, with the site flagging the posts as “potentially harmful”.

Chinese-owned social media platform TikTok is facing growing political backlash in the US as it was sued by the state of Indiana over data security and child safety concerns and banned by multiple Republican state governors from government devices.

A pair of lawsuits filed on Wednesday by Indiana’s Republican attorney-general against the popular short-form video platform, which is owned by Beijing’s ByteDance, alleged that the company had made false claims about its practices. The suits are seeking emergency injunctive relief and civil penalties from TikTok.

In one of the lawsuits, the state claims TikTok had “lured children” on to its platform by suggesting that it only hosted “infrequent/mild” sexual content, profanity, or drug references when the app was actually flooded with such content.

The second lawsuit argues TikTok misled Indiana consumers by suggesting that sensitive personal data it collects on users is protected from the Chinese government and Communist party, when it is not.

The lawsuits come as the social media app is facing mounting scrutiny from US lawmakers over its data practices and the potential threat to national security if private user information is accessible by the Chinese government due to the party-state system — a suggestion the company denies.

For months, TikTok has been working on a national security deal with the US government to address those concerns. This has involved partnering with US cloud software company Oracle to introduce better data protections for American users and more controls over when Chinese staffers have access to that data. However, the deal has yet to be agreed, despite pressure from lawmakers for a timely conclusion.

Separately this week, Texas became the latest state — alongside South Dakota, South Carolina and Maryland — to ban the use of TikTok on government devices, citing the growing “threat of the Chinese Communist party gaining access to critical US information and infrastructure”. 

The bans follow comments by the FBI director Christopher Wray last week, who alleged that the app’s parent company is “controlled by the Chinese government”. This “gives them the ability to control the recommendation algorithm” and “manipulate content”, as well as the ability to collect data for “traditional espionage operations” and conduct other “malicious cyber activity”, Wray said.

Indiana’s attorney-general Todd Rokita in a statement on Wednesday said: “The TikTok app is a malicious and menacing threat unleashed on unsuspecting Indiana consumers by a Chinese company that knows full well the harms it inflicts on users.”

“At the very least, the company owes consumers the truth about the age-appropriateness of its content and the insecurity of the data it collects on users. We hope these lawsuits force TikTok to come clean and change its ways.”

TikTok on Wednesday said “safety, privacy and security of our community is our top priority”, and that it had built “youth wellbeing” into its policies. It also expressed “disappointment” about the decisions by state agencies, adding that these were “largely fuelled by misinformation about our company”.

“We are also confident that we’re on a path in our negotiations with the US government to fully satisfy all reasonable US national security concerns, and we have already made significant strides toward implementing those solutions,” the company said.