I don't know anyone who expected this. The typical failure mode is slow degradation and lack of new development, not sudden collapse. Services become flakier, innovation stops. There was probably some fat to cut,as you put it, but the concept of eating your seed corn is also relevant.

Worse, it continues to trend downward.

Most sane tech CEOs would prefer to keep their upward trend and $5+ billion revenue rather than saving $1 billion to lose $2.5 billion and invert their slope.

My immediate reaction to that was the "jig is up"--I argued with friends that Twitters functionality would remain intact, there'd be no major outages, etc and they couldn't understand how that'd be possible.