A hack of prominent Twitter accounts is a nightmare for more than just the social network itself. Fake tweets soliciting digital currency on Wednesday from figures like Tesla Chief Executive Elon Musk and U.S. presidential candidate Joe Biden mean Twitter’s cybersecurity costs will rise. But if that’s all that happens, founder Jack Dorsey can count himself lucky. Posts on the social network have the potential to move markets, or worse.
The intrusion was severe enough that Twitter locked down so-called verified accounts – its label for those owned by high-profile people. Microsoft co-founder Bill Gates, former President Barack Obama and Amazon’s Jeff Bezos were among those that had appeared to solicit bitcoins from other users – saying that whatever was given would be doubled by them and returned. It sent Twitter’s stock down by almost 4% in after-market trading.
For investors in tech companies, a major hacking incident usually means one thing: higher costs. Twitter’s expenses already rose nearly 20% in the first quarter of the year, resulting in an operating loss of $7 million compared to a profit of $94 million a year earlier. Ideally, that’s offset by a reduced risk of future embarrassing events.
The scam, though, could have been worse. Tweets from business leaders can move markets. Then there’s President Donald Trump, who uses the platform to announce new policies – and communicate with, or about, other world leaders. It’s not hard to see how a fake tweet could send markets reeling, or even pose a national security risk.
So what can be done? Users with public profiles could start behaving differently online, even if Trump doesn’t. The company, like other social media networks, benefits from having highly active celebrity users, and Covid-19 has actually proved good for business. Twitter’s average monetizable daily active users hit 166 million in the first quarter, an almost 25% increase. Fewer prominent tweeters could impact that trend, and hurt ad revenue.
And if users don’t proceed with caution, regulators could also step in. Expect law enforcement agencies, and Congress, to want to know more about Twitter’s security processes. The social network could even emerge stronger for the scrutiny. The world, as well as the company’s investors, should hope it does.