Elon Musk Claims He’s Not Worried About The FTC; He Should Be

Legal Issues

from the musk-is-gonna-musk dept

Soon after Elon took over Twitter and fired everyone, we wondered (somewhat jokingly) if there was anyone left at the company who was aware of the FTC’s consent decree with the company, signed originally in 2011, but which runs for 30 years, and which was updated back in May of 2022. These documents have some fairly strict requirements for the company around protecting the privacy of its users, and also limiting employees access to certain data.

A recent Washington Post article that is mainly about Musk’s actions over the past two months has destroyed his reputation among many who previously were impressed by him includes two tidbits about Musk and the FTC that suggest he’s in for a world of hurt when the agency takes action.

First, while I was kind of joking about not knowing about the consent decree, the article makes it abundantly clear that Musk not only wasn’t aware of the consent decree when he agreed to purchase Twitter, but he still seemed unaware of it after taking over the company:

When one executive met with Musk and voiced concerns about the Federal Trade Commission’s consent decree, Musk assured that person there was nothing to worry about. He said Tesla had plenty of experience on privacy matters, and pointed to his deep knowledge and awareness of the constraints Twitter was under.

Minutes after the meeting concluded, a subordinate of Musk emailed: Would the executive be willing to send over a copy of the consent decree they had just discussed?

Both of these paragraphs should be seen as mindblowing. First, it’s difficult to read this as anything but Musk having no clue about the existence of the consent decree, which has some very specific provisions. Tesla having “plenty of experience on privacy matters” is meaningless in this context. It’s the equivalent of someone asking Sam Bankman-Fried if he understood the laws against money laundering, and SBF responded by saying “I manage my resources well in League of Legends.” It’s not just completely non-responsive, it suggests someone who has no clue what they’re talking about.

The fact that an underling had to immediately then ask the exec for a copy of the consent decree just puts an exclamation point on all of this, suggesting that even his underlings know when Musk is in over his head and they’re going to scramble to try to clean up the mess.

However, later in the article it becomes clear that Musk’s lack of concern over the consent decree is likely creating more and more problems. The article mentions Musk’s order to a Twitter employee to violate the consent decree to give reporter Bari Weiss full access to all their systems:

Musk chose Bari Weiss, a former New York Times columnist, as one of the writers invited inside the company to go through documents.

“Please give Bari full access to everything at Twitter,” Musk wrote to a subordinate in a Signal message viewed by The Washington Post. “No limits at all.”

That was concerning to many inside Twitter — particularly those familiar with the 2011 FTC settlement after hacks of high-profile accounts, including that of then-President Barack Obama. Staffers responsible for her onboarding pushed back and refused to grant Weiss the full access Musk had requested, believing it would violate the settlement.

One former employee described that step as “super unprecedented” and “highly inappropriate,” saying Twitter would never have granted that level of access to an outside party who might suddenly be able to read direct messages, for example.

The pushback, however, was not taken as seriously at senior levels.

Days later, Musk announced deputy general counsel Jim Baker had been “exited” from the company, as the CEO cited what he called his “possible role in suppression of information important to the public dialogue.” Former employees said it would have been normal for an attorney to review documents for release.

That same day, Alan Rosa, Twitter’s chief information security officer in charge of access matters, was fired from the company as well. Employees that week found Weiss’s name searchable in Slack, the company’s internal messaging service. But her access was overseen by a chaperone, new Twitter Trust and Safety chief Ella Irwin.

The Baker stuff is known and has been previously reported, but I don’t believe I’ve seen anyone discuss the FTC implications of giving Weiss “full access” with “no limits at all.” Remember, the first consent decree was focused on the FTC smacking down Twitter because employees had too much access to private user data, opening it to abuse. So Musk ordering that seems like a pretty clear violation of the original consent decree — and the article seems to suggest that the firing of Baker and Rosa may have been to smooth the path to violating the consent decree.

The addition of a “chaperone” almost certainly does not solve the consent decree concerns.

And, yes, the FTC is very much paying attention. The agency could use a big win, and it sounds like its extremely ambitious (but extremely problematic) case against Meta is not going well. And here’s Musk more or less ramping up direct violations. The FTC has asked Twitter for more information on how it’s complying with the consent decree. And, more recently, it became clear that the FTC has ramped up its investigation into the company, including talking to former top execs who have left the company since Musk took over.

FTC lawyers have interrogated two former top Twitter executives in the past month – Damien Kieran, the former chief privacy officer, and Lea Kissner, the most senior cybersecurity officer, the people said. Kieran and Kissner both quit Twitter Nov. 10, alongside the head of compliance. 

The probe marks at least the third time the FTC has scrutinized the social media platform over its privacy and data security practices. The review could lead to millions of dollars in fines and a new FTC order imposing obligations on Musk himself that would apply across his companies and remain in effect even if he steps down as chief executive officer or leaves Twitter.

And, as we noted earlier, violating an FTC consent decree can come with serious consequences. This isn’t like some other agencies, like the SEC, that Musk has basically ignored. The FTC doesn’t mess around like that.

Given that Musk is desperate to make Twitter profitable, a costly legal battle or a massive fine from the FTC could be a pretty big problem.

Also: a completely avoidable one. Complying with the consent decree was the kind of thing that Musk could have easily prioritized early on, but he seems to have deliberately chosen not to. If the details of the WaPo story regarding how he handled getting info to reporters for the laughably bad reporting on the “Twitter Files” is accurate, this is a complete own goal. Not just easily avoidable, but also directly made worse by Musk himself for no good reason at all.

Filed Under: elon musk, ftc, ftc consent decree
Companies: twitter