Twitter Comes Under Washington Spotlight With Whistleblower Complaint - WSJ

  

Category:  News & Politics

Via:  vic-eldred  •  one month ago  •  26 comments

By:   John D. McKinnon and Dave Michaels (WSJ)

Twitter Comes Under Washington Spotlight With Whistleblower Complaint  - WSJ
“If these claims are accurate, they may show dangerous data privacy and security risks for Twitter users around the world,” said Sen. Dick Durbin (D. Ill.), the chairman of the Judiciary Committee. “I will continue investigating this issue and take further steps as needed to get to the bottom of these alarming allegations.”

S E E D E D   C O N T E N T



WASHINGTON—A whistleblower's complaint opens up new political and legal challenges for Twitter in Washington, as lawmakers and regulators examine possible responses to the social-media company's alleged missteps.

The complaint from former Twitter security executive Peiter Zatko was filed to the Securities and Exchange Commission, the Federal Trade Commission and the Justice Department, which are expected to investigate.

The complaint was also sent to lawmakers on the Senate Judiciary and Intelligence committees, who pledged to conduct their own investigations.

“If these claims are accurate, they may show dangerous data privacy and security risks for Twitter users around the world,” said Sen. Dick Durbin (D. Ill.), the chairman of the Judiciary Committee. “I will continue investigating this issue and take further steps as needed to get to the bottom of these alarming allegations.”

A Twitter spokeswoman said Mr. Zatko’s complaint, which was earlier reported by the Washington Post and CNN, was rife with “inconsistencies and inaccuracies and lacks important context.”

Twitter declined to comment on possible congressional investigations.

The complaint comes as Twitter wages a legal battle in Delaware with  Tesla  Inc. Chief Executive  Elon Musk , who sought to buy the social-media company but has accused it of misrepresenting  the prevalence of bots and fake accounts  on its service.

Mr. Zatko’s complaint echoes some of what Mr. Musk has already alleged or questioned about Twitter’s user base and accuses the company of failing to protect sensitive user data and lying about its security problems.

Any regulatory response from Washington would take time to develop. The SEC in particular takes years to investigate and bring securities-fraud cases, and it isn’t clear whether Mr. Zatko’s claims would rise to that level.

The SEC could investigate Mr. Zatko’s allegations that the company and its executives understated or misrepresented the scope of spam or fake accounts on its platform.

To pursue an enforcement action, the SEC would need to find that any omitted or misleading information was material to shareholders, meaning it could influence a decision to buy or sell.

The SEC tends to probe many whistleblower tips and, if investigators find wrongdoing, can punish public companies that misled shareholders about material risks or financial metrics. Whistleblowers are eligible to receive payments equal to 10% to 30% of the fines collected if their information is original and helpful to an enforcement action.

Mr. Zatko’s decision to publicize his complaint is unusual for SEC whistleblowers, whose identities are kept secret by the SEC. Some whistleblowers choose to go public with their allegations because it can create more political and public support for an investigation.

It couldn’t be learned how much of Mr. Zatko’s information would be new to the SEC. Mr. Musk has waged a monthslong campaign to raise questions about how Twitter estimates and discloses the percentage of its monetized users who are bots or spam accounts.

“This reads like an overreach to make known and logical issues that likely have been the subject of regulatory scrutiny for months to appear as ‘original’ information under the SEC’s whistleblower statute,” said Jacob Frenkel, a former SEC enforcement attorney who is now a defense lawyer at Dickinson Wright LLP.

“The SEC’s investigative process will get to the core of what actually was said to whom and what was not disclosed and why,” he added. “SEC enforcement will separate financially motivated spin from fact.”

An SEC spokesman and a Justice Department spokeswoman declined to comment. The FTC didn’t respond to a request for comment.

In Congress, aides to Sen. Durbin and the committee’s top Republican, Sen. Chuck Grassley (R., Iowa), have been working together to plan next steps in their investigation.

On Wednesday, Sens. Durbin and Grassley announced the committee would hold a hearing on the allegations Sept. 13, with Mr. Zatko scheduled to testify.

“If these claims are accurate, they may show dangerous data privacy and security risks for Twitter users around the world,” Sens. Durbin and Grassley said in a statement.

The Senate Intelligence Committee also is looking into the complaint, and “is in the process of setting up a meeting to discuss the allegations in further detail,” a Democratic spokeswoman for the committee said. “We take this matter seriously.”

Legislation to create new consumer-privacy protections, meanwhile, has been bottled up after  passing a House committee by a lopsided margin  last month.

The allegations, if true, “are alarming and reaffirm the need for Congress to pass comprehensive national consumer privacy legislation to protect Americans’ online data,” said a joint statement from House Energy and Commerce Committee Chair Rep. Frank Pallone Jr. (D., N.J.) and Rep. Cathy McMorris Rodgers (R., Wash.), the panel’s ranking Republican.

Some lawmakers urged federal regulators to take tough stands, including against individual Twitter executives.

“These troubling disclosures paint the picture of a company that has consistently and repeatedly prioritized profits over the safety of its users and its responsibility to the public,” said Sen. Richard Blumenthal (D., Conn.) in a letter Tuesday to FTC Chairwoman Lina Khan.

He urged the FTC to pursue enforcement actions, “including bringing civil penalties and imposing liability on individual Twitter executives where appropriate.”

The FTC voted earlier this month to begin considering new federal rules  to expand online privacy protection .

Twitter has come under FTC scrutiny previously. The agency in 2011 prohibited Twitter from “misrepresenting the extent to which the company maintains and protects the security, privacy, confidentiality, or integrity of any nonpublic consumer information,” according to an FTC summary.

The FTC and Justice Department said in May that Twitter had violated the 2011 order by collecting users’ personal information—ostensibly for security reasons—and using it to sell ads to them over the past decade or so. Twitter agreed to pay a $150 million civil penalty to resolve the claims.

The new complaint could deepen the company’s significant political problems in Washington. Many Republicans already regard Twitter with suspicion, saying it censors conservatives disproportionately, a charge the company has denied. Mr. Musk has given weight to that allegation with  his own complaints about censorship .

“Taken together, Zatko’s allegations, the DOJ and FTC complaints, and the repeated security incidents illustrate a company that prioritizes profit over users and has allowed a culture of impunity to reign supreme,” said Sen. Ed Markey (D., Mass.) in a separate letter to the FTC and Justice Department. “I strongly urge the federal government to investigate Zatko’s claims and, if necessary, take strong and swift action against Twitter to ensure Twitter user data is properly protected.”


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Vic Eldred
Professor Principal
1  seeder  Vic Eldred    one month ago

Former Twitter security executive Peiter Zatko says he has the goods.  These are serious charges that go well beyond what Senate democrats are complaining about. It would mean that Twitter not only failed to protect the privacy of its users but lied to its investors about the level of bots. It may also have a direct bearing on the Elon Musk case. The SEC investigation must take into account that Twitter's management knew there was an issue over fake accounts but did little to get to the bottom of it and may have lied about how serious it was. 

If true that would be fraud.


Donald Trump is absolutely off topic.

 
 
 
Jeremy Retired in NC
PhD Guide
1.1  Jeremy Retired in NC  replied to  Vic Eldred @1    one month ago
It would mean that Twitter not only failed to protect the privacy of it's users but lied to it's investors about the level of bots.

Wasn't the lack of information about the bots why Elon Musk pulled from buying the company?

 
 
 
Vic Eldred
Professor Principal
1.1.1  seeder  Vic Eldred  replied to  Jeremy Retired in NC @1.1    one month ago

Yes it was.

Some say he used the bot issue because the change in stock prices had made it a bad deal. It looks like Musk had something there. Guys like Musk seldom make bad deals.

 
 
 
Tessylo
Professor Principal
1.1.2  Tessylo  replied to  Vic Eldred @1.1.1    one month ago

Musk didn't have anything there.  It was just an excuse.  I hope they still sue his ass.  

 
 
 
Vic Eldred
Professor Principal
1.1.3  seeder  Vic Eldred  replied to  Tessylo @1.1.2    one month ago
Musk didn't have anything there.

No?  Let's tell the SEC. Why have them do a needless investigation?


It was just an excuse. 

I tend to agree, but he may have chosen the right one.


I hope they still sue his ass. 

Right now they are worried about their own asses!

 
 
 
Buzz of the Orient
Professor Principal
1.1.4  Buzz of the Orient  replied to  Vic Eldred @1.1.3    one month ago

What I could never understand is that there is a monetary penalty for walking away from the deal.  If so, then there should not be a lawsuit for breaking the deal, because it's anticipated in the agreement and the penalty for doing so is specific. 

 
 
 
Vic Eldred
Professor Principal
1.1.5  seeder  Vic Eldred  replied to  Buzz of the Orient @1.1.4    one month ago

The penalty may be specific, but Musk is claiming that the company misrepresented what he was buying. Doesn't he get an exception to a walking away penalty for that?

 
 
 
Buzz of the Orient
Professor Principal
1.1.6  Buzz of the Orient  replied to  Vic Eldred @1.1.5    one month ago

I suppose Musk is suing in order to not have to pay that specific "walk away" penalty, but Twitter's lawyers should argue that it's his only remedy.  If it didn't exist he would be free to sue. 

 
 
 
Jeremy Retired in NC
PhD Guide
1.1.7  Jeremy Retired in NC  replied to  Tessylo @1.1.2    one month ago
I hope they still sue his ass.

I hope they do as well.  It will bring an end to this bot stuff once and for all and not end well for Twitter.

 
 
 
Vic Eldred
Professor Principal
1.1.8  seeder  Vic Eldred  replied to  Buzz of the Orient @1.1.6    one month ago

I'm sure that's what it is. The price of Twitter shares had changed during the negotiations and Musk would have over-paid for Twitter. He may have found a valid issue though with the idea of Twitter underestimating the bots. I always thought that the longer that case takes, the more it will benefit him because there will be more time to examine those bots. Now we have congress and the SEC looking at it via a significant whistleblower.

 
 
 
Tessylo
Professor Principal
1.1.9  Tessylo  replied to  Vic Eldred @1.1.8    one month ago

Nonsense.  It was just an excuse.  I hope they sue his ass for millions, unfortunately that really won't hurt his bottom line, just elevate him in the minds of his now new rabid base.

 
 
 
Vic Eldred
Professor Principal
1.1.10  seeder  Vic Eldred  replied to  Tessylo @1.1.9    one month ago

What if Twitter deliberately underestimated it's bots?

It's not just about Musk. They would be lying to their investors as well.

 
 
 
Drinker of the Wry
Freshman Principal
1.1.11  Drinker of the Wry  replied to  Tessylo @1.1.9    one month ago

Apparently the SEC doesn't consider it as nonsense.  They've been asking Twitter questions in response to concerns of bot activity. Their review followed after Musk raised concerns over the same user figures.

 
 
 
Drinker of the Wry
Freshman Principal
1.1.12  Drinker of the Wry  replied to  Tessylo @1.1.9    one month ago

Today, the Delaware judge granted Elon Musk additional Twitter data ruling that Twitter must hand over more detailed information on its tallying of bot and spam accounts. 

 
 
 
Buzz of the Orient
Professor Principal
2  Buzz of the Orient    one month ago

I don't miss not having any involvement with Facebook, Twitter, Instagram and the like.  None of them are clean - they all eventually get found out. 

 
 
 
Vic Eldred
Professor Principal
2.1  seeder  Vic Eldred  replied to  Buzz of the Orient @2    one month ago

Do any of them protect our privacy?

 
 
 
Buzz of the Orient
Professor Principal
2.1.1  Buzz of the Orient  replied to  Vic Eldred @2.1    one month ago

Personally, I doubt it, so why aren't they being banned?  Perhaps they aren't because there isn't a political motivation for doing so.  

 
 
 
Vic Eldred
Professor Principal
2.1.2  seeder  Vic Eldred  replied to  Buzz of the Orient @2.1.1    one month ago
Personally, I doubt it, so why aren't they being banned?

I suppose somebody might say that we should allow free speech. The strange part of that is that these platforms are censoring speech.


Perhaps they aren't because there isn't a political motivation for doing so.  

I'd say there is too much political motivation for keeping them.

 
 
 
Buzz of the Orient
Professor Principal
2.1.3  Buzz of the Orient  replied to  Vic Eldred @2.1.2    one month ago

I suppose that they can deal with the "free speech" aspect by using "endangerment to national security" - gives them control, bullshit or not.  There's a free speech aspect to those who are supporting Julian Assange, but that's a different issue, isn't it. 

 
 
 
Vic Eldred
Professor Principal
2.1.4  seeder  Vic Eldred  replied to  Buzz of the Orient @2.1.3    one month ago
There's a free speech aspect to those who are supporting Julian Assange, but that's a different issue, isn't it. 

I believe he is facing 175 years in jail. The last I heard, there is an Australian Billionaire trying to support his case.

"Australian billionaire James Packer has slammed the treatment of Julian Assange as 'outrageous' and donated $250,000 to the campaign to free the Wikileaks whistleblower. Packer vowed he would do 'whatever it takes' to try and win freedom for Assange, who is in jail in London awaiting extradition to to the United States to face espionage charges and a potential 175 years in jail."


 
 
 
Buzz of the Orient
Professor Principal
2.1.5  Buzz of the Orient  replied to  Vic Eldred @2.1.4    one month ago

I know Assange is off topic on this article, but I would like to see an article/seed posted about his case to open discussion about it.  Someone a lot more familiar with American law than I am should post it. 

 
 
 
Vic Eldred
Professor Principal
2.1.6  seeder  Vic Eldred  replied to  Buzz of the Orient @2.1.5    one month ago
I know Assange is off topic on this article,

Officially, only one thing is off topic on this article.


Someone a lot more familiar with American law than I am should post it. 

I don't know if we have such a person here on NT. I may call the "Strategy Gaming DoJo."  He is an excellent lawyer...out in CA.

 
 
 
Vic Eldred
Professor Principal
3  seeder  Vic Eldred    one month ago

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Peiter Zatko, Twitter’s former head of security, accused the company in a whistleblower complaint of making misleading regulatory disclosures about spam and fake accounts. PHOTO:   MATT MCCLAIN/THE WASHINGTON POST/GETTY IMAGES


According to a securities filing Wednesday, Twitter responded in June to questions from the SEC staff about how it calculates bots and whether an error in how it tallies monetizable daily active users, or MDAUs, revealed problems in its financial reporting. Twitter said the error wasn’t significant and didn’t affect its earnings or other financial results.


 
 
 
JohnRussell
Professor Principal
4  JohnRussell    one month ago

My thoughts are that Elon Musk is a rich eccentric right wing crackpot and I dont care what happens to him. Just leave our world alone Mr. Musk. 

 
 
 
Vic Eldred
Professor Principal
4.1  seeder  Vic Eldred  replied to  JohnRussell @4    one month ago

A right wing crackpot?   Since when?  He makes electric cars and he makes them before their time!

 
 
 
Drinker of the Wry
Freshman Principal
4.2  Drinker of the Wry  replied to  JohnRussell @4    one month ago

The Ukraine is depending on his StarNET constellation for internet access. 

 
 

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