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Business News/ Technology / Elon Musk’s Twitter Asks Court to Terminate FTC Settlement

Elon Musk’s Twitter Asks Court to Terminate FTC Settlement


Move comes as House panel opens hearing into Federal Trade Commission’s Twitter probe

Federal Trade Commission Chair Lina Khan is testifying at a House Judiciary Committee hearing Thursday. Premium
Federal Trade Commission Chair Lina Khan is testifying at a House Judiciary Committee hearing Thursday.

Elon Musk’s Twitter asked a federal court to terminate a 2022 settlement it agreed to with the Federal Trade Commission over alleged privacy violations, saying it had been subject to a “burdensome and vexatious enforcement investigation."

The move came hours before House Republicans and FTC Chair Lina Khan clashed at a hearing Thursday over her agency’s investigation of Twitter and what her critics say is an antibusiness agenda.

The FTC is examining whether Twitter under Musk is protecting users’ privacy. House Judiciary Committee Chairman Rep. Jim Jordan (R., Ohio) and other Republicans on the panel say Democrats are targeting Musk for actions such as reinstating banned conservative accounts, including that of former President Donald Trump.

The panel has subpoenaed Khan for documents related to the probe, but she has withheld them, saying FTC investigations are confidential and that the agency will “enforce the law without fear or favor."

The FTC has said the Twitter investigation is looking for potential breaches of a previous agreement between the FTC and Twitter, in which the company settled alleged violations of consumer-protection law by agreeing to a detailed and intrusive set of data-security controls. Republicans say that disclosures about the FTC’s probe indicate the agency is overstepping its authority.

“This wasn’t harassment, it was a shakedown," Jordan said.

Jordan pointed on Thursday to new disclosures in Twitter’s court filing, which cited testimony by a third-party auditor hired to review Twitter’s practices under the FTC order. According to the filing, an employee from Ernst & Young, the auditor, said he felt “as if the FTC was trying to influence the outcome of the engagement before it had started."

“The Court should not permit the FTC to continue invoking judicial power to prosecute an investigation so infected by bias that it has lost any plausible connection to lawful purpose," Twitter said in the court filing, which it filed under its corporate name, X Corp., in U.S. District Court in Northern California.

In the filing, Twitter accused the FTC of pummeling the company with demands for information and said it has produced more than 22,000 documents.

Twitter also asked the court to stay a deposition of Musk by the FTC, saying Musk isn’t a party to the consent order between Twitter and the FTC. The 2022 Twitter order comes after a previous FTC agreement with the company from 2011.

Also in the filing, Twitter said Musk made several requests to Khan for a meeting, but that Khan said she would consider scheduling a meeting only after Twitter had fully complied with all FTC requests.

“FTC overreach has gone absurdly far beyond the legal mandate granted by Congress," Musk tweeted Thursday. “Weaponization of government agencies for censorship & political machinations needs to stop."

“Our focus is on protecting people’s privacy and security," Khan said at Thursday’s hearing. “Twitter has sensitive data on 150 million Americans, including private messages…we are doing everything to make sure Twitter is complying with the order."

She said she wasn’t familiar with the allegations in Twitter’s new legal filing, including about the Ernst & Young auditor. “As a general matter, we want to make sure that the assessors and auditors that are responsible for overseeing compliance are doing their job," she said.

In addition to the Twitter probe, Republicans sought to show that Khan is pursuing an antibusiness agenda driven by progressive social goals untethered from the law.

Her appearance comes just two days after a judge ruled against the FTC’s effort to stop Microsoft’s proposed purchase of videogame developer Activision Blizzard, providing more grist for Republicans who claim Khan is pursuing specious cases. The FTC is appealing the ruling.

“I have to ask: Why are you losing so much?" said Rep. Kevin Kiley (R., Calif.).

Jordan added that Khan “is trying to usher in a radical departure from the norms that made the American economy great, to a system where her and her cronies have unchecked power over business practices in our country," Jordan said Thursday.

Khan and her Democratic defenders as well as some small business groups say her more combative approach to antitrust enforcement has notched successes, for example by blocking allegedly anticompetitive deals such as semiconductor giant Nvidia’s proposed acquisition of Arm, a leading chip designer.

Even the FTC’s losses in the tech sector help make the case for Congress to toughen antitrust laws, they say.

“My worry has been about under-enforcement," Khan told the House panel. “There were missed opportunities in the last few decades where all too often entire sectors were allowed to consolidate."

She also cited the agency’s enforcement efforts designed to make it easier for consumers to cancel online subscriptions and other matters.

“Ultimately Chair Khan, you will face attacks today because you are doing your job," said Rep. Jerrold Nadler (D., N.Y.), the top Democrat on the judiciary panel. “There are credible concerns that user data may have been compromised when the majority of [Twitter’s] legal engineering staff was fired. This work has nothing to do with the new ownership of the company and his political views."

Some Republicans at the hearing praised Khan, including Rep. Matt Gaetz (R., Fla.), who cited a recent FTC privacy enforcement action against Amazon’s Ring security camera business.

Republicans on Thursday also will likely question Khan on her decision to participate in a recent case against social-media giant Meta Platforms, despite the recommendation of an FTC ethics official that Khan recuse herself based on previous public statements about the company. The ethics official held Meta stock at the time, The Wall Street Journal reported.

Khan said at the hearing that she was advised ethics rules allowed her to make her own decision about whether she could participate in the case, in part because she didn’t have a financial interest in the companies involved. “There was no ethics violation," Khan said.

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