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SAN FRANCISCO — A federal judge on Thursday rejected an attempt by Elon Musk’s social media company to overturn a May 2022 Federal Trade Commission order that imposed requirements to protect its users’ personal information.
The company, then known as Twitter, had agreed to the order and a $150 million fine after the FTC found that it asked for users’ phone numbers as a security mechanism but used them for marketing purposes.
Musk bought the company later that year and renamed it X. By then, the FTC had opened a new investigation based on an explosive whistleblower complaint from former Twitter security chief Peiter Zatko, who said the company’s engineers had widespread access to data with ineffective tracking.
Musk’s legal team asked U.S. Judge Thomas Hixson to reject the FTC’s order on the grounds that the agency improperly tightened its controls after Musk’s takeover and also pressured an outside reviewer of the company’s security practices to find fault with them.
Hixson denied that request after a hearing in San Francisco, ruling that the court was involved in the underlying case only for limited procedural reasons, such as transferring case files to the Justice Department. He wrote that he lacked the authority to vacate a consent order approved by an FTC administrative law judge.
Hixson also declined to interfere in the FTC investigation by allowing Musk to avoid giving a deposition.
In his 11-page ruling, Hixson pointed out other problems with X’s argument. For example, the company had quoted an Ernst & Young employee who said in his testimony that he felt the FTC expected him to identify problems with X’s privacy program. But Hixson pointed out that the same employee said his work had been delayed by the constant turnover in senior management after Musk took office and the lack of named parties responsible for several aspects of the privacy program.
And while it’s true that the FTC increased its activities after the takeover, it gave reasons why, Hixson wrote.
“The government says this increase in investigative activity should not be surprising given that Musk has conducted at least five rounds of terminations, layoffs or other reductions in X Corp’s workforce.” “The government argues that given these significant changes in the company, the FTC has concerns about X Corp.’s ability to had to comply with the administrative order,” he ruled.
“As to the removal of Musk, the government argues that the significant changes at the company appear to have been initiated by Musk himself,” the judge said, declining to stop the removal.