Elon Musk continues to be a disruptive force in the tech sphere, as reports are coming to light that he refuses to pay Amazon roughly $70 million in server hosting fees that were negotiated under past leadership.
Amazon Web Services (AWS) constitutes some, not all, of Twitter’s cloud-based operations and completed a five-and-a-half-year deal in 2020 worth over $500 million. Twitter also signed a $1 billion dollar contract with Google for similar services that are in effect.
It appears that Musk is attempting to rework the deal now that he has full ownership of Twitter by withholding money owed under the current contract. In response, AWS has threatened Twitter with withholding ad revenues until payment is received.
Breitbart described the two expensive, albeit necessary, contracts by noting that Musk seems to have transitioned more to Google since taking over the company. Twitter initially “agreed to pay” the contract in full, but had a change of mind after utilizing Google’s hosting services more. Breitbart said:
Twitter agreed to pay $510 million over the course of the agreement, and it was anticipated that Twitter would transfer its primary hosting to AWS. But since Twitter now makes greater use of Google Cloud, this never happened. Twitter’s $1 billion, five-year contract with Google is currently still active, despite the company’s efforts to cut costs associated with its Google Cloud usage.
If math is the only concern, Breitbart noted that AWS had threatened to withhold around $1 million of ad revenues from the first quarter. Twitter not paying back $70 million seems like a net gain. Of course, unfulfilled contractual obligations seem likely to send Musk to court, where legal fees and adjudicated outcomes are still up in the air.
Twitter did recently pay $10 million to AWS.
Breitbart went on to note that since Musk took over the company last fall, the social media platform has encountered several outrages. As he looked to cut costs and operate more efficiently, Musk has also closed down huge data centers and fired an untold number of tech-related staff. Breitbart continued, saying:
Since Elon Musk bought Twitter, there have been a number of significant outages. Musk has cut back on server capacity, closed one of Twitter’s three U.S. data centers, and fired IT and software staff who kept the service operational. According to reports, this has seriously disrupted the platform, and many users are dissatisfied with the persistent problems.
However this plays out, it is fascinating to watch two of the world’s richest men essentially compete for internet dominance. Musk is considered then world’s richest person, and he is going toe-to-toe with Jeff Bezos, another quite wealthy individual despite losing half of his net worth to an exorbitantly costly divorce.
Musk and Bezos have also constructed their own rockets as they compete in the growing space race of the private industry.
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