CEO Elon Musk of X Corp, the company formerly known as Twitter, should be forced to testify in a federal government probe of the social media service.
The Federal Trade Commission (FTC) said it wants to hold X to account for the privacy agreement it had previously signed and for the billionaire investor to testify for his actions since buying the company.
The attempt to compel Mr. Musk to testify is the latest round in an investigation that began well before his acquisition of the social media firm.
FTC Probes X Over Prior Security Agreement
Federal authorities have argued that Mr. Musk’s actions after his $44 billion acquisition of X called into question his ability to comply with the company’s security obligations under a 2011 FTC consent agreement.Twitter had previously paid a $150 million fine in 2022, right before Mr. Musk’s takeover, for violating the 2011 consent decree.
In 2011, the FTC and Twitter mutually agreed to a settlement, requiring the social media firm to safeguard user privacy protections, after it suffered two serious data breaches.
Earlier this year, X attempted to urge a federal court to terminate the FTC consent decree and to block Mr. Musk from being forced to testify, accusing authorities of asking too many questions in its probe.
The FTC asked the court to deny the social media firm’s request to terminate the privacy settlement, which would give Mr. Musk immunity from testifying about his company’s recent decisions.
The regulator argued in its filing, that its interest in his testimony was well-justified based on the appearance of a “chaotic environment” at X driven by “sudden, radical changes at the company” following last year’s acquisition.
“The FTC had every reason to seek information about whether these developments signaled a lapse in X Corp.’s compliance” with the 2011 order, the filing said.
Former Twitter Staffers Testify Against Musk
According to the court filing, former staffers cited concerns about being asked to do things that would violate the privacy agreement.Several former X executives, including its former chief information security officer and former chief privacy officer, testified that the wave of layoffs and resignations following Mr. Musk’s takeover last October may have prevented the social media giant from complying with the FTC obligations to protect users’ privacy.
The regulator alleged that he “exercised granular control of X Corp., at times directing employees in a manner that may have jeopardized data privacy and security.”
The agency said that Mr. Musk had “first-hand knowledge about the current state and direction of the company’s data practices and efforts to comply with the 2022 Administrative Order” and that X’s “meritless” motion to dismiss, should be denied.
FTC' said its investigation on the matter had “revealed a chaotic environment at the company that raised serious questions about whether and how Musk and other leaders were ensuring X Corp.’s compliance” with the administrative order, according to court documents.
Some of the decisions made by Mr. Musk and others, regarding the mass layoffs and other “cost-cutting” measures, had “impaired X Corp.’s ability to ‘put technical restrictions and controls in place ... around the company’s use of contact data to make sure that it was being used ... for the purpose that the particular contact data was collected,” said Lea Kissner, Twitter’s former chief information security officer, in her testimony.
Ms. Kissner said there were so few employees left after the departures that anywhere from between 37 to 50 percent of the company’s security staff lacked effective management and supervision.
She claimed there was no one left to take responsibility for the social media app’s security systems and left planned upgrades to the program, “impaired.”
The court filing further accused Mr. Musk of personally attempting to rush the rollout of Twitter Blue, the app’s paid subscription service.
Regulators Pursue Musk Over ‘Twitter Files’ Release
The FTC also alleged that Mr. Musk’s decision to grant journalists access to internal company records from before his acquisition, also known as the “Twitter Files,” which showed evidence of collusion between the White House and the company to censor politically conservative posts, could have led to the exposure of private user data in violation of the FTC agreement.According to the filing, the original plan called for providing journalists access to the files via a dedicated company laptop with “elevated privileges beyond just what a[n] average employee might have.”
“Longtime information security employees intervened and implemented safeguards to mitigate the risks,” the filing said, but even then, the former employees testified, the process raised doubts about Mr. Musk’s commitment to privacy and security.
If the violations of the FTC order are confirmed, it could lead to billions of dollars in fines for X along with potential legal consequences for executives like Mr. Musk, if they are deemed personally responsible for them.
However, the FTC investigation has been accused by Mr. Musk’s allies in Congress of being politically charged, calling the regulator’s latest moves an act of harassment and overreach by the Biden administration.
“The protection of Americans’ personal data is important, and the FTC has a role in ensuring that companies do not mislead consumers about how their information is handled,” wrote Sen Ted Cruz (R-Texas) and Rep. Jim Jordan (R-Ohio) in a letter to the FTC.
“But the FTC’s legal authority does not include dictating entire swaths of corporate behavior under the guise of consent decree enforcement. Nor could it justify infringing on the First Amendment,” they wrote.
