Daily Crunch: After Musk's Buy Completes, NYSE Will Delist Twitter Shares on Election Day

The FTC has telegraphed what now appears to be an inevitable investigation into Twitter’s internal data-handling practices as the company continues to lay off key staff and improvise new features. “No CEO or company is above the law,” the agency said in a statement — and if Elon Musk’s Twitter continues its current rampage, they could find themselves in violation of the FTC’s order and face serious consequences .

To be clear from the outset, the FTC has not announced any investigation into Twitter or Elon Musk, nor even that they are collecting information in service of such an investigation. Nor could he confirm that he was investigating if that was the case. But circumstantial evidence, common sense and the ominous statement released today leave little doubt that the company is in the agency’s crosshairs.

In the course of its ordinary oversight duties, the FTC hears complaints from consumers, companies, and anyone with sensitivities about things like misleading advertising, broken promises of privacy, illegal business arrangements, and more. But in 2011, Twitter agreed to a consent decree with the regulator after it was found to be misusing user data. It was also found to have been done again over many years on investigation which ended in a $150 million settlement earlier this year, so it’s not some bygone red tape.

That order requires Twitter to establish and maintain a program to ensure and regularly report that its new features do not misrepresent “the extent to which it maintains and protects the security, privacy, confidentiality, or integrity of any non-public user information.” The revised order adds more oversight and gives the FTC more power, because apparently Twitter needed a stick as well as a carrot.

The bottom line is that Twitter is already in the doghouse with the FTC and has specific and legally binding requirements about what it can and can’t do with data and how it verifies compliance.

At the time of the settlement Elon Musk entered the scene and now we have all this. But last night’s news several executives working with datano doubt important for walking the line with a watchful regulator, all reportedly left at once. Literally minutes after I wrote this paragraph, it was announced that the company’s head of trust and safety, Joel Roth, was also leaving.

This would be troubling for any company, at any time, under any level of federal scrutiny. But for Twitter, the outgoing bosses might as well have hired a skywriter to write “INVESTIGATE ME” in big letters over Twitter’s headquarters. (Of course, normally this could apply to any number of companies in downtown San Francisco, but there’s a small question right now.)

The amount of changes, the new products, the elimination of various departments and processes (many of which are related to privacy, fairness, data processing and other important topics) do not mean that Twitter is necessarily in violation of the consent decree. But with things going the way they are, it’s pretty hard to imagine it being in line now, or if it is, whether it will stay that way for long.

It’s important to understand, however, that the FTC is not like the FBI, breaking down doors and arranging evidence into goddamn dioramas. The FTC conducts its investigations privately and protractedly – they cannot and do not publicize the fact that they are looking into a company for any wrongdoing until there are legally binding consequences such as a signed consent decree, settlement, or decision to sue through the Department of Justice.

Although many expected the FTC, under the guidance of technology skeptic and very smart person Lina Khan, to be more proactive, he is limited by law in what he can do. It’s actually a little surprising that the agency got as spicy as it did in the full statement:

We are following the latest developments on Twitter with deep concern. No CEO or company is above the law and companies must follow our consent decrees. Our revised consent order gives us new tools to ensure compliance, and we are ready to use them.

While it doesn’t say “We’re sharpening our knives,” this statement is still such a strong implication that they’ll be calling Twitter as soon as they can justify it. (Juicy pill revealed by CNN’s Brian Fungwhile tantalizing, it may refer to ongoing discussions about the $150 million settlement, so don’t get too excited.)

If they decide to pursue an investigation, which they likely will, if there are any red flags at all, let alone that many, it will be done confidentially – but importantly, it’s not a secret.

This means that although the FTC’s policy is not to disclose or comment on an investigation, an investigated company or person can do so at any time if they choose. So if the Federal Trade Commission makes an official request for certain data from Twitter or ousts its executives (current or former), they may decide to release that information.

In fact, Twitter did this in late 2020, well before the settlement with the FTC was finalized. After all, you don’t want your investors to be the last to know about something like a $150 million fee, even though telling them risks being discovered by hawk-eyed journalists.

So if the FTC is investigating Twitter, we’re much more likely to learn about it from the company — in a filing with investors or, more likely, from its reckless and effusive CEO during one of his increasingly frequent emergency meetings.

Twitter’s state of chaos, however, makes the common observation that we don’t know what it will look like six months from now a gross understatement, meaning that the entire company may have changed hands or business models before the FTC is done (hypothetically) working. Still, that won’t get rid of the excited company. Twitter’s management, or what’s left of it, may want to prioritize survival and compliance with federal regulators before returning to its now regularly scheduled chaos.

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