Musk's Twitter may have already violated his last FTC consent order, say legal experts |  CNN Business

Musk’s Twitter may have already violated his last FTC consent order, say legal experts | CNN Business


Just two weeks into Elon Musk’s ownership of Twitter, the company may have already breached its consent agreement with the Federal Trade Commission, legal experts have said.

If proven, a breach could ultimately result in significant personal liability for Musk, increasing the risks he faces as he stumbles through a quagmire of business headaches and content moderation, most of which has been self-reported. inflicted.

The potential violation stems from a reporting obligation that Twitter must fulfill whenever the company undergoes a structural change, including mergers and sales.

Under Twitter’s latest FTC consent order, which was implemented this year, Twitter must submit a sworn compliance notice to the regulator within 14 days of such a change. The compliance notice is intended to both notify the FTC of major changes to the company and commit to continued compliance with the order, according to David Vladeck, a former top FTC official and law professor at Georgetown University.

Musk’s Twitter deal closed on Thursday, Oct. 27, prompting some legal experts to question Thursday whether Twitter made the right filings in light of the company’s massive layoffs and an exodus of senior executives. . Among those who resigned were its chief privacy officer and chief information security officer, who are expected to be involved in the company’s compliance reporting.

“God damn to the poor b***ards dealing with this,” tweeted Riana Pfefferkorn, a researcher at the Stanford Internet Observatory.

The FTC declined to say whether Twitter has submitted any compliance notices since Musk took over the company. Twitter, which has laid off a significant portion of its public relations team, did not immediately respond to a request for comment.

Alex Spiro, Musk’s attorney, told CNN on Thursday that “we are in an ongoing dialogue with the FTC and will work closely with the agency to ensure we are in compliance.”

Other more substantial regulatory obligations have also been called into question. They include requirements for Twitter to produce written privacy assessments of any new “product, service, or practice” — or when Twitter updates such things — that could affect or put users’ data at risk.

The dizzying pace of product changes at Twitter since Musk’s takeover, combined with the company’s dramatically reduced workforce, have raised doubts about whether Twitter is playing by the rules it agreed to — or even s he can.

“The chaos there is something the FTC is going to be concerned about,” Vladeck said, “because there were serious flaws that led to the consent order in the first place, and the FTC is going to want make sure they do what they are supposed to do.

Internal concerns about Twitter’s compliance obligations were reflected in a Slack message seen by CNN earlier this week, in which an employee warned co-workers that Musk might try to shift responsibility for FTC compliance certification to outsiders. individual company engineers.

“This will place an enormous amount of personal, professional and legal risk on engineers,” the employee wrote, adding that the new risks Musk creates could be “extremely detrimental to the longevity of Twitter as a platform.” .

Matt Blaze, a computer science and law professor at Georgetown University, urged Twitter employees to consult with professional counsel “before signing anything or making a statement to regulators.”

“This is a bus you do NOT want to be thrown under,” Blaze tweeted.

FTC consent orders have the force of law, and any violation, if proven, could result in significant penalties, including fines, restrictions on how Twitter can conduct its business, and even potential sanctions against of individual leaders.

The company’s latest consent agreement was announced this spring after FTC allegations that Twitter misused user account security information, such as phone numbers and email addresses, for advertisers. The resulting consent order expanded on a 2011 consent agreement Twitter signed with the FTC committing the company to maintaining a robust cybersecurity program.

This summer, former Twitter security chief Peiter “Mudge” Zatko claimed that Twitter was failing to meet those obligations in an explosive whistleblower disclosure first reported by CNN and the Washington Post. (Twitter has previously pushed back against Zatko’s claims, saying security and privacy have “long been the company’s top priorities.”)

These allegations, which predate Musk’s ownership, may have already blamed Twitter for billions of dollars in potential fines from the FTC, legal experts have said.

Now, Twitter’s latest alleged violations could mean even more money at stake, as well as possible individual liability for Musk himself. Any alleged violation would first have to be proven and the FTC would have to decide whether or not to enforce it, Vladeck said. But under these circumstances, he said, “I think it’s likely that Musk will be named” in a future consent order. “After all, he has made it clear that he and he alone makes the key decisions.”

The FTC has increasingly signaled that it may seek to hold individual executives personally liable if they are found to be liable for a company’s violations, naming them in future orders and imposing requirements binding on their future conduct, even if they left the company. (Last month, the FTC showed its willingness to follow through by imposing sanctions on the CEO of alcohol delivery service Drizly.)

Foreshadowing such a move, FTC Chairwoman Lina Khan told US lawmakers that former Twitter CEO Parag Agrawal could “absolutely” be held personally liable for Zatko’s allegations, if proven to be true. The FTC has not confirmed whether it is investigating Zatko’s allegations, but on Thursday released a rare statement saying the agency is closely monitoring the current situation. As news of the executive departures unfolded, the agency said it was “following recent developments on Twitter with deep concern.”

“No CEO or company is above the law, and companies must follow our consent decrees,” the FTC said. “Our revised consent order gives us new tools to ensure compliance, and we’re ready to use them.”

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