Should Elon Lay Off All Those Developers?

A look at some other large software companies

Elon Musk’s deal to buy Twitter is supposed to close this week, and he’s made a lot of noise, as is his wont, with a threat to lay off 75% of the staff. Let’s look at the R&D spending of Twitter compared to some other very large software companies. Are they getting their money’s worth? I went through the annual reports, so you don’t have to.

Accounting is how businesses keep score. If, in 2021, a company spends $10 million on a new software system and expects to use it for three years, they can argue that it’s a capital asset, and deduct only $3.33 million per year as “depreciation.” Most software companies don’t do this though, for reasons well beyond the scope of this article. They report it as “Research and Development” and take the entire cost in 2021.

As an aside, I tried to do this for News Corp,, the media giant, and they do capitalize some of their software spending, so I gave up trying to compute their numbers.

Without further ado, here’s the comparison:

There are a million ways to interpret this, or explain it away if you’re Twitter. Twitter is much, much smaller than those other companies, for one thing. Here’s the raw data (by “Google” I really mean “Alphabet”).

(I checked the numbers over once, but it’s always possible there’s a mistake there.)

Anyhow, it does appear that, while Twitter’s revenue has been rising, its R&D has been rising even faster.