FTC Reconsiders $150 Million Privacy Penalty Against X
The Federal Trade Commission (FTC) announced that it is considering modifying or setting aside a 2022 settlement order with X, formerly known as Twitter, regarding the company's use of account security data to support targeted advertising. The settlement, which was issued in May 2022, resulted in a $150 million fine and prohibited the company from continuing to profit from what the FTC called "deceptively collected data."
X, which was acquired by Elon Musk in October 2022 and renamed in 2023, filed a petition arguing that the settlement terms are unfair. The company claims that the order was issued against a company that "no longer exists," and that the workers responsible for the scheme are no longer employed by X. Additionally, X asserts that it has established a "world-class" privacy and data protection program, making the order unnecessary.
X's Argument
X argues that the order "no longer serves any valid regulatory purpose, imposing millions of dollars in needless costs to address obligations and protections already required by domestic and international privacy regimes and industry-recognized frameworks that X Corp. follows." The company also claims that setting the order aside is in line with First Amendment principles and that changing or setting aside the order is "critical to advancing American leadership in artificial intelligence."
The FTC has invited the public to comment on whether it should change or set aside the order. The public comment period will end on July 2, after which the agency will decide whether to move forward with changes.
Background on the Settlement
The May 2022 settlement order alleged that Twitter had suggested users provide their phone numbers and email addresses to safeguard their accounts, but then sold the data to advertisers seeking to target ads to specific consumers, earning large profits. The FTC alleged that Twitter's actions broke a 2011 order that barred the firm from deceiving the public about its privacy and security practices.
Twitter obtained data from users on the pretext of harnessing it for security purposes but then ended up also using the data to target users with ads. This practice affected more than 140 million Twitter users, while boosting Twitter's primary source of revenue.
FTC Chair Lina Khan stated at the time of the settlement. The case highlights the importance of transparency and honesty in companies' data collection and use practices.
Implications and Next Steps
The FTC's consideration of modifying or setting aside the order has significant implications for X and the broader tech industry. If the order is set aside, it could be seen as a victory for X and potentially pave the way for other companies to challenge similar regulatory actions. On the other hand, if the order is upheld, it could serve as a warning to companies to prioritize transparency and honesty in their data collection and use practices.
The public comment period provides an opportunity for stakeholders to weigh in on the matter and provide feedback to the FTC. The agency will carefully consider the comments and make a decision on whether to modify or set aside the order.
As the FTC continues to navigate the complex landscape of data privacy and security, this case serves as a reminder of the importance of robust regulatory frameworks and the need for companies to prioritize transparency and honesty in their data collection and use practices.
Source: The Record