When Elon Musk took over Twitter in 2022, the world's richest man did a number of cost-cutting measures such as laying off a large number of the company's employees, and cutting server machine expenses paid to various other technology companies.
Recently, it has been reported that Elon Musk and X have been sued by Wiwynn, a server machine manufacturer from Taiwan who claims that these two entities have avoided making periodic payments for server machines that have been purchased.
According to Wiwynn, the server machine purchase contract with Twitter dates back to 2014 and is worth around $120 million in terms of server machine components purchased. These payments stopped after Elon Musk took over Twitter, and it is reported that the amount still owed is about $61 million, not including the $40 million worth of components that need to be scrapped and the $19 million worth of server machines that will be resold.
Complicating the situation is that until now, Twitter, or X has refused to communicate with the company, and this led to this lawsuit being filed in court.
Wiwynn is not the only company affected by X/Twitter's actions. Another server machine developer, MiTAC has reported that they had to incur a loss of $43.71 million due to the same issue. They did not file a lawsuit, because they managed to sell these components to other clients and reduce the cost of the loss to the company.
X/Twitter is currently facing huge challenges to operate, particularly because of the challenge of finding advertisers willing to spend with them and also getting their users to subscribe to the X Premium plan.