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Elon Musk reportedly set to cut $1 billion in Twitter infrastructure costs

As Twitter loses millions a day, Elon Musk is set on staunching the flow by making cuts to servers and cloud services.

In a bid to save money after his $44 billion acquisition, Elon Musk has reportedly directed teams at Twitter to find up to $1 billion in savings. These cuts are to be found in the platform’s annual infrastructure costs.

Twitter checkmark icon with a dollar sign
Musk is looking to save money with server cost cuts and by introducing a higher price point for Twitter Blue, which seems to be the new verification system.

On November 3, 2022, Sheila Dang, Paresh Dave, and Katie Paul of Reuters reported that Elon Musk has ordered teams at Twitter to cut annual infrastructure costs by $1 billion. Word of this was made known to Reuters thanks to leaked internal Slack messages.

According to the messages, Twitter is aiming to save at least $1.5 million a day in savings, with a goal of $3 million, by addressing servers and cloud services. Known as the Deep Cuts Plan, employees are reportedly working in the office every day of the week in order to meet a November 7 deadline for the cost saving. This deadline also happens to be when Musk wants to introduce the new Twitter Blue subscription price that will give users the verification checkmark.

Musk is also looking to find savings through job cuts. A report by CNBC states that the new Twitter CEO is looking to fire half of all Twitter staff. In tweet by Yashar Ali, an email has circulated to employees confirming the firings will take place on November 4 with the office temporarily closed an badge access suspended to “ensure the safety of each employee as well as Twitter systems and customer data”.

With employees losing jobs, Musk introducing an $8 a month fee for a blue checkmark, and an infrastructure cost cut of $1 billion, Twitter is aiming to cinch its waist. It will be interesting to see if Musk’s $44 billion acquisition of Twitter is able to start generating revenue or if the platform sees more users jump ship, like video game reporter Nibel did earlier this week. No matter what happens, you’ll hear the latest right here on Shacknews.

Guides Editor

Hailing from the land down under, Sam Chandler brings a bit of the southern hemisphere flair to his work. After bouncing round a few universities, securing a bachelor degree, and entering the video game industry, he's found his new family here at Shacknews as a Guides Editor. There's nothing he loves more than crafting a guide that will help someone. If you need help with a guide, or notice something not quite right, you can Tweet him: @SamuelChandler 

From The Chatty
  • reply
    November 3, 2022 7:30 PM

    Sam Chandler posted a new article, Elon Musk reportedly set to cut $1 billion in Twitter infrastructure costs

    • reply
      November 3, 2022 8:23 PM

      I bet one of the steps is to stop using AWS.

      Cloud vendors (and AWS in particular) killing everyone by getting fat off the profits. Have you seen how much AWS charges for bandwidth? It's obscene.

      Almost all the large web based companies that care about costs will decamp from public cloud or build their own cloud, or just straight up go to bare metal or owning their own datacentres outright.

      • reply
        November 3, 2022 8:25 PM

        (and there's a reason Amazon is part of FAANG but twitter is not ... Amazon makes the money and sucks the blood out of its customers so they can have profits)

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        November 3, 2022 8:27 PM

        Whenever I've looked at public cloud pricing, it ends up being the kind of thing where, for what Amazon is charging, I could just buy actual hardware to do what is needed. Every month or two.

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          November 3, 2022 8:28 PM

          And that's just for the storage and processing. It doesn't even include any needed bandwidth.

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            November 3, 2022 8:33 PM

            bandwidth is where Amazon really sharpens their knives. Their pricing for bandwidth flow is sharpened to a fine point - intended to extract the maximum money from you while making you think it's ok.

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          November 3, 2022 8:31 PM

          yah every single quarter, the server market is insane - you can basically throw away all old servers and rebuy whole datacentres worth of the latest AMD Epyc or Xeon Platinum *every single year* for the price of a quarter of what amazon is charging...

          really? for saving that human labour for managing servers you want to basically set you pile of cash on fire and give it to amazon.

          • reply
            November 4, 2022 3:22 AM

            AWS is only "worth it" if you're using their PaaS/SaaS offerings. If you're only using EC2 instances you're basically burning money for no good reason.

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              November 4, 2022 5:36 AM

              It also depends on the business needs, and whether or not you can do CapEx expenditures or OpEx. If you have a large web presence or are required to service a large number of offices then things like AWS makes sense because of scale. But yeah most companies can probably run fine with a small on-site datacenter, and then renting some racks in another datacenter 50+ miles away to set up a DR point.

              • reply
                November 4, 2022 7:01 AM

                My last boss tried explaining that to me, and maybe it's because I don't have a finance/accounting background, it just doesn't make much sense to me. We were spending something like $500k/month on AWS on hardware we could have purchased outright for around $1.5m outright to install in a datacenter we were already using.

                Maybe there are some tax implications or something I'm not aware of?

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                  November 4, 2022 8:24 AM

                  Capex vs opex is all about fudging the books for a particular purpose for positioning of a company’s financials.

                  Imagine if your company likes to take out loans, major capex could be used to be seen as having assets as collateral. Banks like that kind of thing be ause capex is known, and has a well described and predictable write down schedule

                  If you were trying to get angel investors you can minimize capex and go for opex, telling the story that your company is “nimble” and can “scale up or down” when in reality that’s not really true.

                  It’s all about the story you want to tell about your business.

                  Normal people do it too . Do you rather buy a house for a million (in this market a million isn’t all that much for a house) and build equity, knowing that you’re on the hook for massive maintenance and reno bills, or do your rent for a few thousand a month, knowing that this will give you the ability to move around if needed, have the landlord take care of maintenance, etc?

                  What about the people who have rented for 30 years in the same location with grandfathered / rent controlled monthly payments? Should they rather have bought the house 30 years ago? Etc..

                  Same ideas at play.

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                    November 4, 2022 8:34 AM

                    Yes, but it’s how public and PE firms are run. And it’s only fudging if someone decides it’s wrong 🤷🏻‍♂️🤣

                    Cap ex vs opex is still driving the enterprise tech spend and will continue.

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                      November 4, 2022 11:08 AM

                      yah it wasn't until I talked to some cfo type folks that it started hitting home to me that accounting / the books is actually a creative discipline.

                      there's so many different ways to showcase a company, and even EBITA is telling a story - it's super adjustable too.

          • reply
            November 4, 2022 11:25 AM

            Given how many companies are fully aware of the costs of managing those servers and then migrated to cloud, then had employees leave and start/join new companies and make the same decision what is the lesson? Is it really that everyone is wrong about the ROI here or maybe you’re seriously underestimating the costs and risks involved in managing your own undifferentiated hardware and doing a bunch of IT work that doesn’t contribute to differentiating your core business?

        • reply
          November 4, 2022 8:01 AM

          This is the case if people look at is at picking up the actual hardware footprint they have and rebuilding on a cloud provider.

          If you are able to rearchitect to strengths of cloud offerings and provision correctly, you can save money.

          I oversaw a project where we took $100k/month in datacenter spend to $32k/month on AWS, with a better overall solution and freeing up about 1.5 FTEs on the Infra/Sys admin side by less work to maintain.

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          November 4, 2022 8:34 AM

          The real money is in the ongoing maintenance costs. Yeah you could buy hardware and do it yourself but what happens in 5 years when you need to replace it all? Now you need to buy new hardware, work on a migration plan, ensure no sensitive information remains, and dispose of the old hardware. It’s also much easier to set up resilient, multi-site infrastructure.

          AWS is definitely really expensive but there are plenty of reasons why people use it.

      • reply
        November 3, 2022 8:28 PM

        examples: Dropbox, Backblaze both moved away because aws is money losing.

        Anyone who relies on AWS is going to bleed to death: Heroku is the best example.

      • reply
        November 3, 2022 8:29 PM

        Why would a company build their own cloud? Do you know how many features and functions AWS has?

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          November 3, 2022 8:32 PM

          Yah but you don't need to use *all* the functions. even twitter NEVER will use *all* the features AWS has. When you build your own cloud you can specify what exactly you want. and not have to worry about whether using this subset of functions will bring about drawbacks when reserving on AWS - which is what is happening.

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            November 3, 2022 8:38 PM

            like aws does this "if you use certain amount of this thing, you can book the lower priced tier" or "if you get this and get that server, we will bundle certain databases, but only if you use below this amount of usage" etc

            the bloodsucker accountants at Amazon are *very very good* at what they do. they know exactly what to charge you to make profit. you can never beat them at their own game.

        • reply
          November 3, 2022 8:49 PM

          AWS is a total ripoff unless you’re all in on sass/paas

          Anyone paying for ec2 instances are being ripped off

        • reply
          November 3, 2022 10:05 PM

          You're going to get severely vendor-locked-in if you use all those AWS-specific features though.

          If you just use standard Kubernetes, SQL, Kafka, Prometheus, etc. stuff, it's fine, but if you base your solutions heavily on stuff that only exists on AWS, you won't be able to migrate away without a massive re-engineering effort.

        • reply
          November 4, 2022 7:27 AM

          Do you know how many functions and features on-prem cloud-type services have?

      • reply
        November 3, 2022 8:31 PM

        Good luck building a replacement quickly. Hardware purchasing lead time plus building a bug free adapter layer that makes vCenter API look like an AWS API

        • reply
          November 3, 2022 8:37 PM

          people who think like this probably haven't worked in construction or even as a service desk tech.

          modern engineering, project management, and supply chain management is fantastic.

          if a new building needs to get gutted and redone in NYC for a high frequency trading company, if you have the permits and all the pockets lined, you can have a basic datacentre+high speed bandwidth up in about 2-3 weeks - even that is slow pace compared to the pace of the construction business.

          when you can build a high rise tower in 1-2 years, I find the computer business really self defeating by saying "oh you can't build that fast"....

          • reply
            November 4, 2022 3:19 AM

            That has nothing to do with writing software....

            You can "grease all the palms" you want, it won't make your dockerfiles that are designed for AKS work fine on a homegrown k8's setup. That's what he's talking about.

      • reply
        November 3, 2022 9:06 PM

        Googles always free tier is amazing for small scale stuff

      • reply
        November 4, 2022 1:34 AM

        if i havta go back to managing physical DCs i will retire

        • reply
          November 4, 2022 8:44 AM

          DCs aren't so bad, it's exchange where i will draw the line

      • reply
        November 4, 2022 5:04 AM

        I wouldn't be surprised.

        I think cloud is great for small to medium enterprises but the picture changes when you get stupid big. I bet 1 of 3 things happen

        1. They cry but stay as is
        2. They build out an internal cloud for their own needs to reduce cost
        3. As an extension of 2,they find themselves with spare capacity at some point and want to recoup - so they become a cloud supplier on the side

        • reply
          November 4, 2022 5:36 AM

          Who the fuck is gonna stick around for that? 50% layoffs, requirement to work in-office, and being required to basically work 7 days a week on delivering Musk's new vision of Twitter. You'd have to be desperate, insane, and/or a simp to be interested in signing up for and/or sticking around for that.

          • reply
            November 4, 2022 5:38 AM

            Depends on the number of zeroes I guess. But yes, I'd be steering well clear myself

          • reply
            November 4, 2022 7:43 AM

            Considering how many of these people likely have stock / RSUs tied to employment, it makes a lot of sense to stick around for layoff time. In most cases when you leave the job voluntarily you lose a lot of those benefits.

            • reply
              November 4, 2022 8:05 AM

              The value of the stock and RSUs are all thrown out the window now that they are private. The company just got saddled with insane debt, was "trading" at 40% below the purchase price, and will definitely be revalued lower as well. Who knows if there's anything there for anyone, and private companies are often pretty opaque

          • reply
            November 4, 2022 8:10 AM

            Or stuck there on a visa

        • reply
          November 4, 2022 7:34 AM

          Basecamp is also leaving the cloud

          https://world.hey.com/dhh/why-we-re-leaving-the-cloud-654b47e0

          • reply
            November 4, 2022 7:39 AM

            This doesn't remotely surprise me. It'll be interesting to see how their transition goes

      • reply
        November 4, 2022 5:30 AM

        So Musk is going to layoff half of the Twitter workforce, roll out new features at breakneck speed, and transition to a different or non-cloud backend architecture at the same time, on the tightest of schedules? Good luck with that!

        • reply
          November 4, 2022 6:46 AM

          dude he's a genius

          did you hear he's going to put a man on Mars?

      • reply
        November 4, 2022 7:32 AM

        too bad they are currently firing much of the staff they'd need to convert it over to an internal cloud

      • reply
        November 4, 2022 7:35 AM

        AWS egrees fees are insane

      • reply
        November 4, 2022 8:36 AM

        Also remember that a company can use azure, Google cloud, ibm cloud and oracle cloud (the rest of the top 5) to negotiate against aws.

        I don’t see a single customer paying retail price. Everything is a negotiation and yes even aws is cutting deals.

      • reply
        November 4, 2022 11:27 AM

        That's why my company builds our own cloud infra - we transit so much data on a daily basis we would never be profitable is it was going to Amazon's servers.

        We do use Amazon for associated infrastructure, but the meat and potatoes of our business is all on our own hardware and cloud infra.

    • reply
      November 3, 2022 8:46 PM

      That business can run on like 30 great people.

    • reply
      November 3, 2022 8:46 PM

      It’s Silicon Valley Fixer Upper

    • reply
      November 4, 2022 3:26 AM

      Not quite sure how he expects Twitter to roll out all these new features like subscription videos and stuff and cut down infrastructure costs.

      • reply
        November 4, 2022 4:56 AM

        I've never worked at an org where there wasn't a massive amount of waste on cloud shit. If Twitter is anything like most places they could probably cut half their monthly spend just on excess/waste.

        • reply
          November 4, 2022 8:07 AM

          Yeah, and with their model I'm guessing they intentionally have over-provisioned because they need to handle really chaotic / inconsistent usage with edge/caching all over the place, so they can probably find some savings. But $1B/yr?

          • reply
            November 4, 2022 8:09 AM

            Oh yeah imagine trying to plan infrastructure for shit like the Will Smith slap or "Ukraine gets invaded" etc. I bet that's an insane job haha

            • reply
              November 4, 2022 8:24 AM

              I mean that’s what the cloud us for. It ramps up for spikes and back down. Azure is really good with this and cheap.

          • reply
            November 4, 2022 1:46 PM

            when I say AWS is eating people alive, I mean that twitter's AWS bill is likely on the order of a few hundred million. probably around 300 on the low end and ~600 million on the high end just for AWS not including the management, paying for the the developers/sres to work on it, etc.

            my employer is a medium sized outfit, and before we realized that we really got to tighten our belts, our aws bill was on the order of 10 million per year ish.

            That's not an outlandish bill in aws land, but it's also way way way too much to pay aws for the privilege of vendor lock in.

            • reply
              November 4, 2022 1:47 PM

              (that's the massive amount of waste on cloud shit that magic wish monkey is referring to)

    • reply
      November 4, 2022 5:22 AM

      Looking forward to Musk’s eventual has to sell the company at a significantly lower price because he fucked it into the ground.

      • reply
        November 4, 2022 8:25 AM

        He has enough money that he could eat the entire $44b as a loss and suffer no significant changes to his life.

        • reply
          November 4, 2022 10:27 AM

          That’s disgusting

        • reply
          November 4, 2022 11:04 AM

          Is that true? I figured he'd have to liquidate some assets to cover the bill, like Tesla stock.

          • reply
            November 4, 2022 11:24 AM

            Maybe. Does that significantly change his life?

            • reply
              November 4, 2022 11:31 AM

              It would if it compromises his position at Tesla.

              Wouldn't it be kind if a big deal if he was no longer majority shareholder?

        • reply
          November 4, 2022 11:46 AM

          MBS might dismember him for it though.

      • reply
        November 4, 2022 7:40 AM

        "Twitter has had a massive drop in revenue, due to activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists.

        Extremely messed up! They’re trying to destroy free speech in America."

        • reply
          November 4, 2022 7:57 AM

          lol what a maroon

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          November 4, 2022 11:34 AM

          Lmao, “activists” … yeah. Advertisers definitely care more about a few people vs their brand image as a whole.

          • reply
            November 4, 2022 11:50 AM

            Antifa controls the adevrtisers!!!

      • reply
        November 4, 2022 7:53 AM

        Weird, seems deleted from his feed but still exists as retweets
        https://i.imgur.com/mt537rQ.jpg

      • DM7 legacy 10 years
        reply
        November 4, 2022 8:16 AM

        Didn’t he shadow ban AOC?

        • reply
          November 4, 2022 8:27 AM

          Would it be fun if on their way out someone shadow banned musk?

        • reply
          November 4, 2022 8:56 AM

          He admitted it was a 'naked abuse of power'

          • reply
            November 4, 2022 9:05 AM

            Shit he was naked too?

            • reply
              November 4, 2022 11:05 AM

              of course, don't you jack off naked too?

              • reply
                November 4, 2022 11:05 AM

                naked = no clothes
                abuse = jacking off
                power = his name for his dick

          • reply
            November 4, 2022 9:46 AM

            That was presumably a feeble and ill advised joke.

          • DM7 legacy 10 years
            reply
            November 4, 2022 11:02 AM

            But did he actually? and he’s just taunting at that point?

      • reply
        November 4, 2022 8:26 AM

        Businesses want stability and predictability. Elon is treating Twitter like the toy of a capricious four year old. No wonder they're reacting.

        • reply
          November 4, 2022 8:30 AM

          Also Elon's messaging has all been about free speech. Which directly correlates to racist and sexist garbage going unchecked.

          Coca-Cola doesn't want their advertisement sitting next to a Twitter post of someone just spamming the n-word over and over.

          • reply
            November 4, 2022 9:04 AM

            Elon wants “one way” free speech, he can say or do whatever he wants but no one is allowed to pass judgement on it and take actions or they are an activist or too sensitive.

            • reply
              November 4, 2022 9:06 AM

              Weird that flavor of free speech seems to be common in right-wing and MAGA circles.

              "I can say whatever I want, and you can't say whatever you want."

            • reply
              November 4, 2022 9:13 AM

              Straight out of an abuser’s playbook. Take credit when all goes right, blame others when all goes wrong.

            • reply
              November 4, 2022 11:49 AM

              Reminds me of a few folks here.

      • reply
        November 4, 2022 10:18 AM

        good job Gavin

    • reply
      November 4, 2022 8:27 AM

      I enjoyed this read about content moderation on social media platforms.
      https://www.techdirt.com/2022/11/02/hey-elon-let-me-help-you-speed-run-the-content-moderation-learning-curve/

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