Former FTC Officials Are ‘Certain’ Agency is Investigating Twitter

Peiter Zatko is a legendary ethical hacker who first rose to fame in the 1990s when he exposed several security flaws, including code injection and side-channel attacks. He later worked for DARPA, Google, and Twitter. In August, he accused Twitter of ignoring serious security vulnerabilities.

Former Federal Trade Commission (FTC) officials say they are certain the FTC is investigating Twitter because of a whistleblower complaint filed in August.

That’s according to the NY Post, which talked to former FTC officials, including David Vladeck, the head of the FTC’s consumer protection division from 2009 to 2012. Vladeck told The Post that he can say with “100% certainty that they have opened an investigation” into Twitter.

This summer, legendary “ethical hacker” Peiter “Mudge” Zatko filed a complaint with the Securities and Exchange Commission (SEC) alleging that Twitter had widespread security issues, including a Chinese spy hired as an employee, and that user data, including phone numbers, private messages (DMs), home addresses, and current locations of users, were accessible by low- and mid-level employees in the company. This potentially poses a national security risk, hundreds of politicians, government officials, and journalists are among Twitter’s users.

Zatko was the head of security for Twitter for two years and has alleged that Twitter CEO Parag Agrawal discouraged him from telling Twitter’s board of directors about the security lapses and instead instructed him to give glowing reports to the board.

Twitter said in a statement that Zatko’s allegations are “riddled with inconsistencies and inaccuracies” and that Zatko was fired in January for “poor performance and ineffective leadership.”

The ex-FTC officials tell the Post that the FTC investigation likely revolves around the “consent decree” the FTC issued for Twitter in 2011 which, along with increased security practices, required Twitter to inform users what their data will be used for and respect users’ decisions on how Twitter uses their data.

“If there is reason to believe that a company violated an existing consent order with the FTC, the FTC isn’t going to twiddle its thumbs, it will investigate,” Vladeck told the Post.

Twitter has asked for a subpoena of Zatko’s communications to determine if his complaint was made to help tech billionaire Elon Musk. Twitter and Musk are in the midst of a legal battle as Musk attempts to withdraw from his $44 billion takeover bid of Twitter. Musk alleges that Twitter is hiding the number of bots on the site, an accusation backed up by Zatko’s complaint, which stated that Twitter did not want to investigate how many accounts on the site are fake because it would affect the company’s value. Zatko denies that he made his complaint to help Musk.

But if the FTC does take action against Twitter due to Zatko’s complaint, it may end up hurting Musk. The case between Musk and Twitter is set to start on October 17. If Musk is forced to go through with the deal and purchase Twitter, he could end up paying any potential FTC fine himself.

In May, Twitter settled with the FTC and paid a $150 million fine for breaking the consent decree after regulators say it collected users’ phone numbers and addresses for security and then accidentally handed it to advertisers.

Testifying in front of the Senate on Tuesday, FTC Chair Lina Khan did not confirm that the agency is investigating Twitter, but did say that Zatko’s allegations were “extremely” disturbing.

“There has absolutely been a problem with companies treating FTC orders as suggestions,” Khan said. “We have a program underway to really toughen that up.”

According to the Revolving Door Project, appropriations for the FTC from Congress declined from 2010 to 2019, even while caseloads increased. In 2010, the discretionary budget of the FTC was $205 million, and by 2019 it was $168 million, a 30% drop when factoring in inflation. While its total budget did increase 13% during that time, that increase was due to an increase in fees, which came as merger cases rose. That seems to have affected the FTC’s work. In 2010, the FTC took action in one out of every 53 mergers, but by 2019, that number had decreased to one out of every 99.5 mergers.

However, the agency is set to get a big increase next year, with Congress allocating an additional $113.5M to its budget.