After Losing Poll on Twitter About Staying on as CEO, Elon Musk Dismisses FTC Legal Issues

Elon Musk lost in his own poll about staying on as CEO. Now, legal issues are starting to pile up including one from the FTC.

One of the things that came out of this whole Twitter saga with Elon Musk is that presumptions that he knows what he is doing went completely out of the window. Whether it is Musk owning a controlling portion of Tesla or his presence in running things at SpaceX, it was often presumed by many who don’t necessarily know the inner workings of both that Musk was some sort of visionary and always forward looking. All that changed shortly after buying Twitter for $44 billion. At that point, in a seemingly similar scenario to when Donald Trump became president of the United States, everything Musk did was on full display.

From there, the mystique surrounding Musk vanished and what was left behind was a bungling idiot doing everything wrong. From the mass banning of journalists and restrictions on Mastodon to laying of huge swaths of the employees and executive members, Musk’s tenure always seemed destined to end with the punchline of “the Aristocrats!”

A number of observers had given Musk the benefit of a doubt. Maybe behind the insanity was some sort of business genius that not everyone was seeing right away. As time went on, however, it was becoming abundantly clear that Musk probably had no business of running a lemonade stand, let alone one of the biggest websites on the internet today. The skeptics, in this case, were proven right in spades. A general consensus among observers that Musk is doing a miserable job. Many concluding that the guy is in way over his head or worse. A silver lining in all of this is that Musk’s erratic behaviour has pushed the viability of decentralized social media platforms squarely in the public eye – namely Mastodon which has seen a surge in new users and activity in recent months.

Back over on Twitter, Musk did yet another boneheaded move and put up a poll asking if he should resign as CEO. Whether it was posted in an effort to boost his own personal ego or as a cover to satisfy investors from Saudi Arabia, it’s unclear. What is clear is that Musk lost the poll:

17,502,391 votes were tallied and 57.5% voted for him to resign. Only 42.5% voted from him to stay on board. In response, Musk said that he was looking for a new CEO that is “foolish” enough to take the job.

I will resign as CEO as soon as I find someone foolish enough to take the job! After that, I will just run the software & servers teams.

Of course, there are many potential legal consequences of Musk’s actions for the platform. A platform of this size is about more than just a popular website going down in flames with its credibility being reduced down to burning cinders. Yes, there is a lot of lulz involved in that, but we are also talking about a major company where paychecks are being sent out and employees, however few there are left, are working to keep the companies lights on. So, there are numerous laws that the company must comply with. That is over top of the legal liabilities that the platform has incurred. After all, who could forget Twitter using information obtained for two factor authentication only to use that information for marketing purposes. No question there was quite the set of legal ramifications there.

So, some of those legal constraints Twitter operates under has to do with what is known as an FTC consent decree. Now, the FTC consent decree that Twitter got on board with wasn’t exactly unknown. For instance, Legal Eagle spent a good portion of his time discussing the consent decree in a video that was posted a month ago:

So, something to watch if you want to get a more nitty gritty detailed summary of the FTC consent decree. More recently, the FTC has deepened its probe into Twitter over its privacy and security practices. From Reuters:

The United States Federal Trade Commission (FTC) is deepening its probe into Twitter Inc’s privacy and data security practices, Bloomberg News reported on Tuesday, citing sources familiar with the matter.

The FTC’s lawyers have questioned two former company executives in the past month on the social media platform’s compliance with the agency’s 2011 consent decree, the report added.

The agency has asked the company if it has the required resources to comply with the privacy consent decree, a person familiar with the matter told Reuters last week.

While the pressure appears to be ramping up as questions grow over whether or not Twitter can continue to comply with the FTC consent decree, it appears that Musk is brushing off this pressure as no big deal. From TechDirt:

A recent Washington Post article that is mainly about Musk’s actions over the past two months has destroyed his reputation among many who previously were impressed by him includes two tidbits about Musk and the FTC that suggest he’s in for a world of hurt when the agency takes action.

First, while I was kind of joking about not knowing about the consent decree, the article makes it abundantly clear that Musk not only wasn’t aware of the consent decree when he agreed to purchase Twitter, but he still seemed unaware of it after taking over the company:

When one executive met with Musk and voiced concerns about the Federal Trade Commission’s consent decree, Musk assured that person there was nothing to worry about. He said Tesla had plenty of experience on privacy matters, and pointed to his deep knowledge and awareness of the constraints Twitter was under.

Minutes after the meeting concluded, a subordinate of Musk emailed: Would the executive be willing to send over a copy of the consent decree they had just discussed?

Both of these paragraphs should be seen as mindblowing. First, it’s difficult to read this as anything but Musk having no clue about the existence of the consent decree, which has some very specific provisions. Tesla having “plenty of experience on privacy matters” is meaningless in this context. It’s the equivalent of someone asking Sam Bankman-Fried if he understood the laws against money laundering, and SBF responded by saying “I manage my resources well in League of Legends.” It’s not just completely non-responsive, it suggests someone who has no clue what they’re talking about.

The fact that an underling had to immediately then ask the exec for a copy of the consent decree just puts an exclamation point on all of this, suggesting that even his underlings know when Musk is in over his head and they’re going to scramble to try to clean up the mess.

However, later in the article it becomes clear that Musk’s lack of concern over the consent decree is likely creating more and more problems. The article mentions Musk’s order to a Twitter employee to violate the consent decree to give reporter Bari Weiss full access to all their systems:

Musk chose Bari Weiss, a former New York Times columnist, as one of the writers invited inside the company to go through documents.

“Please give Bari full access to everything at Twitter,” Musk wrote to a subordinate in a Signal message viewed by The Washington Post. “No limits at all.”

That was concerning to many inside Twitter — particularly those familiar with the 2011 FTC settlement after hacks of high-profile accounts, including that of then-President Barack Obama. Staffers responsible for her onboarding pushed back and refused to grant Weiss the full access Musk had requested, believing it would violate the settlement.

One former employee described that step as “super unprecedented” and “highly inappropriate,” saying Twitter would never have granted that level of access to an outside party who might suddenly be able to read direct messages, for example.

The pushback, however, was not taken as seriously at senior levels.

Days later, Musk announced deputy general counsel Jim Baker had been “exited” from the company, as the CEO cited what he called his “possible role in suppression of information important to the public dialogue.” Former employees said it would have been normal for an attorney to review documents for release.

That same day, Alan Rosa, Twitter’s chief information security officer in charge of access matters, was fired from the company as well. Employees that week found Weiss’s name searchable in Slack, the company’s internal messaging service. But her access was overseen by a chaperone, new Twitter Trust and Safety chief Ella Irwin.

While much of this is, indeed, eyebrow raising, the legal issues tied with Twitter are not exclusively in the US. The Irish Data Protection Commission (DPC) is becoming increasingly unimpressed with the shenanigans of Musk. Keep in mind that the Irish DPC has, at least in years past, built a reputation of taking a hands off approach to tech companies among European privacy observers. Yet, even with that reputation, it seems that the governmental organization is now asking questions about the latest activities. From TechCrunch:

In recent days, this access granted by Musk to a few external reporters has led to the publication of what he and his cheerleaders are framing as an exposé of the platform’s prior approach to content moderation.

So far these “Twitter Files” releases, as he has branded them, have been a damp squib in terms of newsworthy revelations — unless the notion that a company with a large volume of user generated content A) employs trust and safety staff who discuss how to implement policies, including in B) fast-moving situations where all the facts around pieces of content may not yet be established; and C) also has moderation systems in place that can be applied to reduce the visibility of potentially harmful content (as an alternative to taking it down) is a particularly wild newsflash.

But these heavily amplified data dumps could yet create some hard news for Twitter — if Musk’s tactic of opening up its systems to external reporters boomerangs back in the form of regulatory sanctions.

Ireland’s Data Protection Commission (DPC), which is (at least for now) Twitter’s lead data protection regulator in the European Union is seeking more details from Twitter about the outsider data access issue.

“The DPC has been in contact with Twitter this morning. We are engaging with Twitter on the matter to establish further details,” a spokeswomen told TechCrunch.

Keep in mind that Europe, through the General Data Protection Regulation (GDPR), have laws and regulation that, when enforced, has some significant teeth. This involves €20 million fines or 4% of annual turnover, whichever is greater. You know for a company like Twitter, it’s going to be the 4%. When regulators fine, they can fine big. Whether anything comes from the Irish DPC investigation is unclear, but it’s definitely an indication that Twitters legal problems are already definitely piling up.

Now, the question is, does Musk have liability assuming that he may be leaving within the next few weeks? Generally speaking, if a law was broken under Musk’s tenure, then that does, in fact, open up the door for legal liability. There’s a lot of complications with that as there may be exceptions I’m not intimately familiar with, but if there was something that Musk did that broke certain laws, that could allow prosecutors to knock on his door even though Musk is later gone from the position. Leaving a position doesn’t necessarily absolve all of a CEO’s legal liability that was incurred while that CEO was in that position. Additionally, there’s the famous Latin phrase in legal circles which says “ignorantia juris non excusat” which basically means that ignorance of the law excuses no one.

At the same time, in the US, there is that infuriating pattern that rich white men have a tendency to get leniency that would otherwise not be granted to someone else in the same kind of legal trouble. A great example being Trump stealing top secret and other classified documents and the hesitation to really legally pursue him to the fullest extent of the law. Very few people would look at Musk and say he isn’t just another rich white male in the US given that he most certainly fits that definition.

So, it’s not entirely clear how this will all shape up in the end at this point. It’s undeniable that there is legal trouble brewing for Twitter and Elon Musk. The real question is, to what extent?

Drew Wilson on Twitter: @icecube85 and Facebook.

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