Twitter to Pay $150 Million Privacy Fine as Elon Musk Deal Looms

Twitter Inc.

on Wednesday agreed to new oversight and a $150 million fine to settle a federal privacy lawsuit, the first major deal between a major tech firm and Biden’s Federal Trade Commission, which has pledged to more aggressively monitor data misuse.

Federal prosecutors alleged that Twitter collected phone numbers and email addresses for account security measures and then fed the information into its advertising tools, an additional use of the data the government said it had not made public. The alleged activity violated a 2011 consent warrant between the FTC and Twitter that prevented it from misrepresenting how it used individuals’ contact information.

FTC head Lina Khan last year.


Graeme Jennings/Perspool

FTC Chairman Lina Khan, appointed by President Biden last year, has pledged to make extensive use of her agency’s power to investigate companies’ data practices and potentially ban certain behaviors.

Rather than exploring new avenues, the pending Twitter settlement suggests an extension of how previous governments used existing enforcement authorities, current and former officials say.

“This is really a sequel. But this is a strong injunction,” said Jessica Rich, former director of the FTC’s Bureau of Consumer Protection, who now works for the law firm Kelley Drye & Warren LLP. Ms Rich, who helped draft the 2011 consent warrant that allegedly violated Twitter, said the new warrant contains provisions that are “much more robust”.

Between 2013 and 2019, Twitter told users it was collecting their information to enable multi-factor authentication measures on their accounts, according to a Justice Department complaint filed on behalf of the FTC. The company failed to properly inform users that it was then using the information to sell ads.

The alleged deceptive behavior affected up to 140 million people, according to a statement from the FTC, which began the investigation during the Trump administration.

In a blog post Wednesday, Twitter Chief Privacy Officer Damien Kieran said user data “may have been accidentally used for advertising” and that the company resolved the issue in 2019.

As part of the settlement, he said, “we have reached an agreement with the agency on operational updates and program improvements to ensure people’s personal information remains safe and their privacy protected.”

The deal comes as Tesla Chief Executive Elon Musk pursues a $44 billion acquisition of Twitter. The $150 million civil fine from the settlement will represent approximately 3% of Twitter’s 2021 revenue.

The FTC order also requires Twitter to notify affected consumers, warn the FTC about future data breaches and undergo independent security audits every two years for the next two decades. The company must provide users with multi-factor authentication options that don’t rely on phone numbers, a provision the FTC has started pushing this year.

The FTC approved the settlement by a unanimous 4-0 vote.

The deal mirrors the FTC’s $5 billion fine against Meta Platforms Inc.

in 2020 for allegedly violating a consent order through deceptive practices, such as using personal information from security features to sell advertisements. The company, formerly known as Facebook, did not admit any mistakes under the settlement.

Ms Khan has said she hopes to write privacy rules to prohibit companies from using certain data and give her agency the power to impose such fines on the first violation. Current and former officials warn that the effort would prove to be a laborious process that faces legal hurdles.

Ms Khan and Democratic FTC Commissioner Rebecca Kelly Slaughter renewed their calls for privacy regulations in a statement on Wednesday. Fellow Democrat Alvaro Bedoya was sworn in as an FTC commissioner this month after a lengthy confirmation process, giving their party the majority to move forward with such regulations.

“In the meantime, we must also hold companies accountable for breaking existing laws, including through misleading disclosures,” Ms Khan and Ms Slaughter said in the statement.

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