Moody’s: Hack unlikely to cause material ramifications for Twitter’s creditworthiness

The new Credit Outlook released today (attached), Moody’s notes while last week’s cyberattack on the accounts of prominent Twitter, Inc. (rated Ba2/stable outlook) users like Bill Gates and Elon Musk is unlikely to have any material ramifications for Twitter’s creditworthiness, it raises significant questions about the company’s internal security measures and poses reputational risks at a time of increased scrutiny on social media entities. The incident also reinforces concerns about the possibility of reputational damage for issuers that have Twitter accounts, as well as the potential vulnerability of the platform to disinformation campaigns during an election year.

Once the cyberattackers seized control of the Twitter accounts, they used a technique known as an “advance-fee scam” to solicit money from followers with the promise that the money would be returned to them twofold. The attackers succeeded in netting upward of $100,000 in Bitcoin. In response to the attack, Twitter rapidly restricted access to its internal systems. The attack also highlights the challenges for social media companies in protecting their platforms from abuse and the increasingly important roles they play in many regions.

The incident could strengthen or renew calls for more oversight of social media companies in the US, where most of the victim accounts appeared to be based, and where the Federal Bureau of Investigation has launched an investigation into the incident. Already, a growing body of regulations and legislation worldwide will add to compliance costs for social media companies.

The Twitter attack also highlights the potential risks for issuers that communicate through social media platforms. In this incident, the attack was widespread and easily identified as anomalous behavior. However, if the attackers had instead targeted the accounts of a few specific corporate issuers and used them to publish damaging material, this could have harmed the companies’ reputations and brands, with the potential for longer-term negative effects on their financial health and creditworthiness.

This incident also occurred in an election year, when voters and officials are concerned about a repeat of disinformation campaigns that flourished on social media platforms, including Twitter, ahead of the 2016 US presidential election. In a recent report, we discussed how attackers can use social media to disseminate false or misleading information, which in the short term could influence voters’ perceptions of candidates and ultimately influence their voting decisions on Election Day. A longer-term result could be increased political apathy and decreased trust in institutions if the interference is uncovered and deemed to have materially influenced the final outcome of the election. This type of interference could have credit-negative economic implications if it exacerbates sociopolitical tensions or disrupts the stability and functioning of institutions and governance, impeding the development and implementation of timely policymaking.

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