A high-profile petition to vacate a federal privacy settlement has divided privacy advocates and state officials. The outcome could impact data practices and AI development costs for major platforms.
Elon Musk's effort to dissolve a consent decree between X and the Federal Trade Commission is drawing sharp lines across the digital publishing and tech sectors. The move has significant implications for how platforms handle user data, privacy compliance costs, and the pace of AI development.
The consent decree, established in 2022, resolved allegations that Twitter-now X-misled users by collecting phone numbers and email addresses for security, then using that data for advertising. X, acquired by Musk after the decree, argued in a May filing that the company has since overhauled its privacy practices, replaced responsible personnel, and invested heavily in data protection. The company reported nearly $17 million in compliance costs, claiming these resources could have supported AI technology development instead.
Privacy watchdogs remain unconvinced. Fifteen advocacy groups, including the Electronic Privacy Information Center and Electronic Frontier Foundation, urged the FTC to reject X's petition. They cited ongoing privacy risks, referencing a Forbes report of a 2.8 billion record leak from X in the previous year. The groups argued that X's AI initiatives should trigger more, not less, regulatory oversight, given the scale of consumer data involved.
Meanwhile, a coalition of 12 state attorneys general, led by Iowa, supported Musk's petition. They accused the FTC of using the consent order to investigate activities unrelated to consumer privacy, such as editorial decisions and information shared with journalists covering the "Twitter Files." The states described the decree as an outdated barrier to American AI leadership. However, former FTC Chair Lina Khan told lawmakers the agency's probe focused on whether Twitter improperly disclosed private user communications, a potential violation of the decree. She also said internal staff prevented actions that could have breached the agreement.
The original settlement stemmed from Twitter's 2019 disclosure that marketers accessed user data collected for security purposes. In May 2022, X agreed to pay $150 million and implement a privacy and security program, undergo independent biennial evaluations, conduct risk assessments for new products, and respond to FTC information requests. The company did not admit or deny the FTC's allegations at the time of settlement.
