National

Twitter has agreed to pay $150 million for using users' security data to target ads, violating a 2011 order by the Federal Trade Commission, the agency announced along with the Department of Justice Wednesday.

Driving the news: The complaint, filed by the DOJ on behalf of the FTC, stated that starting in 2013 through 2019, Twitter asked users for their phone numbers or emails for account security, but did not tell users the information would be used by advertisers to target messages.

The complaint says this behavior also violated the U.S.-EU privacy shield, the former data-sharing agreement between the U.S. and Europe. 

The 2011 FTC order barred Twitter from misrepresenting its privacy and security practices to users.

What they're saying: “Twitter obtained data from users on the pretext of harnessing it for security purposes but then ended up also using the data to target users with ads," FTC Chair Lina Khan said in a release. "This practice affected more than 140 million Twitter users, while boosting Twitter’s primary source of revenue."

“The $150 million penalty reflects the seriousness of the allegations against Twitter, and the substantial new compliance measures to be imposed as a result of today’s proposed settlement will help prevent further misleading tactics that threaten users’ privacy," Associate Attorney General Vanita Gupta said in the same release.

How it works: The DOJ filed the complaint in the U.S. District Court for the Northern District of California, and a judge has to approve it for it to go into effect. Twitter paying the fine settles the FTC's allegations. 

Twitter said in a 2020 filing with the Securities and Exchange Commission that it may face a $150 to $250 million fine, citing a then-draft FTC complaint. The company said in 2019 it had shared email addresses and phone numbers with advertisers "unintentionally."

Details: In addition to the fine, Twitter agreed to:

not profit from "deceptively collected data";

allow users to use multi-factor authentication without phone numbers;

notify users of misusing their information;

implement a comprehensive privacy and security program and consider privacy in new products;

limit employee access to personal data of users and tell the FTC if there is a data breach.

"Keeping data secure and respecting privacy is something we take extremely seriously, and we have cooperated with the FTC every step of the way," Twitter said in a blog post. 

"In reaching this settlement, we have paid a $150M USD penalty, and we have aligned with the agency on operational updates and program enhancements to ensure that people’s personal data remains secure and their privacy protected."

Twitter to pay $150M for violating FTC privacy order

Twitter has agreed to pay the fine for using account security data to targeteadvertising.

Illustration of the Twitter bird with a hundred dollar bill in its beak.   

Twitter

Big Tech

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

SpaceX president and COO Gwynne Shotwell defended Elon Musk after Business Insider reported last week that SpaceX paid $250,000 to settle sexual misconduct allegations against the billionaire, CNBC reports.

Driving the news: Insider reported a SpaceX flight attendant had alleged sexual misconduct against Musk, including that he exposed his erect penis to her and touched her inappropriately while aboard a private flight in 2016. SpaceX later settled with her for $250,000 in a deal that also barred her from discussing the payment or disclosing any information about Musk, according to Insider.

Musk, who is in the middle of acquiring Twitter, called the claims "utterly untrue."

What she's saying: In an email to SpaceX employees last week, Shotwell said that SpaceX has "ZERO tolerance" for harassment before defending Musk.

"Personally, I believe the allegations to be false; not because I work for Elon, but because I have worked closely with him for 20 years and never seen nor heard anything resembling these allegations."

She also said the company's HR team investigates all claims and takes disciplinary action when warranted.

A spokesperson for SpaceX did not immediately return a request for comment.

SpaceX executive defends Elon Musk against sexual misconduct allegations

"I have never seen nor heard anything resembling these allegations," SpaceX COO Gwynne Shotwell wrote.

Elon Musk at the Metropolitan Museum of Art in New York City on May 22. Photo: Theo Wargo/WireImage

Elon Musk

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Elon Musk met with Brazilian President Jair Bolsonaro on Friday to discuss connectivity and other technology projects ahead of Brazil's election.

Why it matters: Musk traveled to Brazil as part of his satellite internet service Starlink's expansion in the region. The visit comes as Musk is increasingly engaged with global politicians, especially conservative leaders. 

The big picture: The high-profile billionaire has made headlines recently for his bid to takeover Twitter and announcement that he will vote for Republicans.

Brazil has been swept up in a growing misinformation crisis as the Oct. 2 election looms.

Lawmakers and the courts have both expressed alarm that Bolsonaro is sowing distrust in the election.

Brazilian Senate committee voted last year to approve a report recommending Bolsonaro be charged with a raft of criminal indictments, including crimes against humanity over his response to the pandemic.

What they're saying: Bolsonaro tweeted Friday that the two spoke about "connectivity, investments, innovation and the use of technology to reinforce the protection of the Amazon forest and the realization of Brazil's economic potential."

Prior to the meeting, Musk had tweeted, "Super excited to be in Brazil for launch of Starlink for 19,000 unconnected schools in rural areas & environmental monitoring of Amazon."

 Deforestation in the Amazon reached its highest annual rate in over a decade under Bolsonaro, according to AP.

Elon Musk meets Bolsonaro ahead of Brazilian election

The visit comes as Musk is increasingly engaged with global politicians, especially conservative leaders.

Photo of Jair Bolsonaro on the left and Elon Musk

President of Brazil Jair Bolsonaro (left) and billionaire Elon Musk. Photos: Andressa Anholete and Dimitrios Kambouris for The Met Museum/Vogue via Getty Images

Latin America and Latinos

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

World

The White House slammed Amazon founder Jeff Bezos on Monday after the billionaire accused President Biden of "misdirection" in his comments on inflation and corporate taxes. 

Driving the news: Biden tweeted Friday that the wealthiest corporations must "pay their fair share" to help bring down record-high inflation. 

Biden also recently met with Amazon labor organizers after their union victory.

How it happened: Bezos responded to Biden claiming inflation and corporate taxes aren't related.

"Raising corp taxes is fine to discuss. Taming inflation is critical to discuss. Mushing them together is just misdirection," he tweeted.

What they're saying: "It doesn’t require a huge leap to figure out why one of the wealthiest individuals on Earth opposes an economic agenda for the middle class that cuts some of the biggest costs families face, fights inflation for the long haul, and adds to the historic deficit reduction the President is achieving by asking the richest taxpayers and corporations to pay their fair share," deputy White House press secretary Andrew Bates said in a statement per the Washington Post. 

"It’s also unsurprising that this tweet comes after the President met with labor organizers, including Amazon employees."

Bezos fired back shortly after, saying the White House is trying to "muddy the topic."  

"They know inflation hurts the neediest the most. But unions aren’t causing inflation and neither are wealthy people. Remember the Administration tried their best to add another $3.5 TRILLION to federal spending," he tweeted. 

"They failed, but if they had succeeded, inflation would be even higher than it is today, and inflation today is at a 40 year high."

Worth noting: Bezos publicly backed using long-term corporate tax hikes to support Biden's $2 trillion infrastructure plan in April last year.

The big picture: Most economists say raising corporate taxes would reduce inflation, though it would not necessarily have a huge impact, AP reports.

White House slams Bezos criticism of Biden tax comments

Photo of Joe Biden on the left and Jeff Bezos on the right

Photos: Anna Moneymaker and Paul Ellis/Pool via Getty Images

Jeff Bezos

Joe Biden

Axios Media Trends

Percentage change in price of DWAC,<br> Twitter and Tesla

Data: Yahoo Finance; Chart: Axios Visuals

There’s no better proof of Twitter’s impact on public conversation and markets than one tweet moving billions of dollars in market cap across three different companies in a matter of minutes. 

Driving the news: Elon Musk’s tweet that his pending Twitter takeover deal was “temporarily on hold” sent Wall Street on a wild ride Friday. Investors were already beginning to grow skeptical of Musk’s bid, but the possibility that he could walk sent Twitter’s shares tumbling more than 20% before the market opened.

Musk's tweeted clarification two hours later that he was still “committed” to the acquisition gave the stock a pop, but shares still closed down nearly 10% at market close.

Be smart: Musk’s tweet set off a ripple effect across a slew of companies, including Tesla, which saw shares jump nearly 6% on the possibility that Musk wouldn’t become a part-time CEO.

Shares in DWAC, the blank check company that plans to take former President Trump’s social media company Truth Social, also gained on the possibility that Elon might bail on the deal.

How one Elon Musk tweet showed Twitter's impact on the stock market

Musk’s tweet set off a ripple effect across a slew of companies.

Media

Two tech industry groups filed an emergency application Friday night asking the Supreme Court to block a lower court ruling that allowed Texas' controversial social media law to take effect.

Why it matters: The law allows users to sue a social media company if they are blocked from posting or have their posts removed. Civil liberties experts and tech advocates have said it would force companies to let problematic speech such as hate and misinformation stay up on their platforms.

Republicans, including proponent Gov. Greg Abbott, say the law lets users retain freedom of speech amid social media companies' campaign to silence conservative ideas and beliefs.

What they're saying: The Texas law "is a content-, viewpoint-, and speaker-based law that would eviscerate editorial discretion and impermissibly compel and chill speech by targeted, disfavored 'social media platforms,'" NetChoice and the Computer & Communications Industry Association (CCIA) say in the filing.

"[T]he entire impetus for HB20 was that Texas did not like how platforms were exercising such editorial discretion to remove or refrain from disseminating certain speech," they write.

"For all platforms, the expressive act of policy enforcement is critical to the distinctive experiences that platforms provide their users — and to ensuring that the services remain hospitable and useful services."

"Without these policies, platforms would offer fundamentally worse (and perhaps even useless) experiences to their users, potentially overrun with spam, vitriol, and graphic content," the filing states, citing slurs, pornography and material harmful to children such as content urging eating disorders.

Our thought bubble, via Axios' Ashley Gold: The groups fighting the 5th Circuit ruling wouldn't have sent it to the Supreme Court if they weren’t confident the justices would vote in their favor. 

What will be most important to watch is what unfolds in the upcoming Texas court case over the merits of the law.

Tech groups ask Supreme Court to block Texas' controversial social media law

The law allows users to sue a social media company if they are blocked from posting or have their posts removed.

Photo of the Supreme Court building from the side 

The U.S. Supreme Court building on May 11. Photo: Drew Angerer via Getty Images

Supreme Court

Axios Login

The likely demise of Roe v. Wade is putting a new spotlight on privacy rights and personal data. But even as some big tech companies are beginning to try to limit how much data their existing products collect, the industry keeps rolling out new waves of devices and services that scoop up even more personal info.

Why it matters: Any trove of data will sooner or later end up at the other end of a request, or order, to be shared with law enforcement. The newest generation of gear, including autonomous vehicles and always-on cameras, could provide the state with a persistent and omnipresent method of surveillance.

The big picture: "Data minimization" is an ethical guideline, encoded in the EU's GDPR privacy framework and other regulations, urging organizations to collect only the data they actually need and to keep it only as long as they need it.

Google has taken a number of steps in this direction, including processing more data on devices rather than in the cloud and allowing users to set information to be deleted automatically.

Apple has made data privacy a core principle, encrypting messaging data and limiting access to some other types of data so that only the user with the device can access it.

Be smart: Broader shifts in computing threaten to overshadow those efforts with new classes of products that depend on massive collection of data. 

One big trend is building devices around sensors and cameras that are always recording, such as doorbell cameras and autonomous vehicles.

The machine learning algorithms that underlie everything from search engines to speech recognition only work when trained on mountains of data, creating another incentive for companies to build info stockpiles.

"Not only will more data be collected but exponentially more," says Evan Greer, deputy director of Fight for the Future. "It's inevitable that mountain of additional data being collected will be abused."

Driving the news: This week, Vice reported details of the San Francisco Police Department seeking footage from GM-owned Cruise, one of several autonomous car companies whose vehicles are constantly riding around the streets of the city. 

The SFPD acknowledged to Axios that it makes requests for footage to investigate specific crimes, but denied it wants to use them for ongoing surveillance.

Civil rights groups say the stakes of collecting such data have also increased, especially in the U.S. 

"Those data sources have long been vulnerable to government demands," says Matt Cagle, a staff attorney at the ACLU of Northern California, However, the rise of AI is "pouring fuel" on the fire, Cagle said, "particularly in this moment when states are criminalizing abortion and gender affirming care."

"In a world where the Supreme Court might overturn Roe v. Wade, that dystopian hypothetical is no longer hypothetical," Cagle told Axios.

Of note: Vast amounts of data are also available for purchase online, allowing law enforcement agencies to acquire information they may not be able to get through a court order.

Between the lines: While customers have some say over how their own data is stored on their devices, in many cases these newer technologies are sweeping up tons of data about bystanders and third parties.

With a doorbell camera, it's the home owner or renter who buys the device, but the video can capture everyone who passes by. 

Autonomous vehicles owned by large tech companies like Cruise and Waymo are capturing footage of anyone in their path.

Yes, but: Data stockpiles sometimes serve a public good, especially in documenting human rights abuses. 

One example: four Congressional Democrats Thursday called on Facebook and TikTok to preserve evidence of potential war crimes in Ukraine.

Flashback: Makers of the Flip camera, a portable video device that was popular before smartphones could capture large amounts of video, promoted the idea that more people recording more of their lives would make the world safer. This 2009 video explains it pretty well.

"Less is more" comes to big data

Big Tech is starting to limit the volume of data it grabs — but the industry keeps shipping new products that gobble up more info.

Data

Column / Signal Boost

Surveillance

Lawmakers could consider a slate of antitrust legislation in Congress ahead of the 2022 midterms. But conversations with Reps. Pramila Jayapal (D-Wash.) and Eric Swalwell (D-Calif.) at an Axios event Thursday signaled disagreement even among Democrats on the impact of those bills. 

State of play: Lawmakers are working against the clock on bipartisan efforts to broadly reshape the Big Tech landscape. Insiders told Axios the outlook is bleak for the proposals if they're not put for votes ahead of Congress's August recess.

What he's saying: Swalwell told Axios' Margaret Talev Thursday he's concerned the reforms "would throw the baby out with the bathwater" and put U.S. national security at risk for the sake of reining in Big Tech. 

The legislation could embolden the Chinese government's efforts at currency manipulation, intellectual property theft and espionage, Swalwell said.

Swalwell said he's concerned the reforms would allow "sideloading" — letting users download apps from unofficial platforms or the open internet. 

"You would allow the Chinese to flood these stores with almost no regulation, with apps that could pipe U.S. consumer information — potentially national security information — back to China," Swalwell said. 

The bottom line: "That is primarily my concern — to not give China a backdoor to U.S. persons' data without any protection," he said.

Swalwell said he'd welcome addressing his concerns through an amendment to one of the bills. He said hearings at Congress's judiciary or intelligence panels with the FBI, NSA and CIA "about what risks there are with this legislation" would also assuage his concerns. 

Members of the New Democratic Coalition led by Rep. Suzan DelBene (D-Wash.) have also expressed concerns about the antitrust bills.

The other side: Concerns that the tech legislation will hurt national security are "a red herring," Jayapal told Axios' Ashley Gold during a conversation that followed Swalwell's.

Jayapal said national security experts have told her the bigger risk is "for us to not have the competition that pushes the right kinds of innovation forward."

"Our national security is really affected when consumers have no choices, when small businesses can't thrive," Jayapal added.

Tech antitrust bills' big foe: the calendar

Democrats split on Big Tech measures in Congress

There's disagreement even among Democrats on the impact of legislation moving through Congress.

Illustration of the Capitol dome with police tape in front featuring binary code

Big Tech regulation

Policymaking

Axios Events

Rep. Pramila Jayapal (D-Wash.), at an Axios event on antitrust legislation Thursday, called on the Federal Trade Commission to "look ... very closely" into the merger of Amazon and MGM.

The big picture: Nearly a year into her tenure, FTC chair Lina Khan now has a chance to move through her agenda after the confirmation of privacy expert Alvaro Bedoya on Wednesday secured a Democratic majority on the commission.

What she's saying: "I think with Bedoya there, there is a real chance for them to pursue some of the most recent mergers that have been announced," Jayapal told Axios' Ashley Gold on Thursday. "We know that she didn't take the Facebook lawsuit further — let's see what she does there." 

"I think there are a number of things she'll be looking at and I don't know which one's going to be first but I think she's got a comprehensive view of the problem."

The majority will give Khan a chance to be proactive and "look at mergers much earlier," Jayapal said. 

"One of the problems with mergers is you're always looking at what is going to be the impact of this today. You're not looking at what the impact is going to be five years down, or 10 years down." 

"I think there needs to be a different way of looking at mergers and the burden of proof needs to be in a different place." 

Go deeper: Lina Khan's to-do list on Big Tech

Jayapal: New FTC majority should look into Amazon-MGM deal

"[T]here is a real chance for them to pursue some of the most recent mergers that have been announced."

Federal Trade Commission (FTC)

Google announced Wednesday that it is making use of a more inclusive data model as part of its effort to make its services work equally well across a wide range of human skin tones.

Why it matters: Google is the front door to the internet, and every step it takes toward more equitable products affects billions of people.

Details: Google says it has begun using the Monk Skin Tone Scale, developed by Harvard professor Ellis Monk, as a guide to evaluating its products. Monk's scale is comprised of 10 tones, compared to the more widely used Fitzpatrick model, which only uses six.

"It’s much more representative," said Tulsee Doshi, head of product on Google's responsible AI and product inclusion team.

Google has licensed the scale from Monk and is making it freely available via open source license.

The company has started using the scale within its own products. Among the first instances are in image search, where it is used in options for selecting makeup, and in Google Photos filters.

The big picture: Developing equitable technology means counteracting decades of discrimination while also taking steps to ensure that human bias doesn't become automated, entrenched and, ultimately codified through algorithms.

A great deal of basic technology, including much of photography, was designed with white users in mind. Google, along with a number of other tech companies, is finally starting to try to unwind some of that history.

Snapchat's inclusive camera effort, first detailed by Axios, aims to address the legacy of film cameras whose chemical processes were optimized for properly developing images with lighter skin tones, a legacy that continued into the digital era.

With the Pixel 6 and Pixel 6 Pro smartphones, released last year, Google has been heavily touting its Real Tone feature, aimed at better capturing darker skin tones.

Yes, but: Tech's bias problems go far beyond skin tone. Doshi acknowledges that there is a lack of diversity of images on the internet. "The web itself has had a history of bias in terms of who we take photos of, who we publish," Doshi said.

Between the lines: Google's work with the Monk Scale is being done within its responsible AI team, the same unit that has been the center of controversy after the company ousted both of the team leaders, Timnit Gebru and Margaret Mitchell.

What's more, Gebru tweeted Wednesday that she was the one who introduced the company to Monk's work.

Doshi said that Google has been working to improve the culture on the Inclusive AI team, including trying to make it easier for members to criticize the company.

Google adopts more inclusive skin tone model

The company has licensed the 10-tone Monk Scale and is making it freely available to others.

Google

Facebook CEO Mark Zuckerberg took to his own platform to reject claims made by a former employee in testimony before Congress on Tuesday.

Why it matters: Facebook whistleblower Frances Haugen urged Congress earlier Tuesday to regulate the tech giant, accusing Facebook of putting profit before user well-being.

Facebook also took volleys of criticism from senators at a Senate Commerce subcommittee hearing last week on its research into Instagram's impact on young girls.

What he's saying: The Facebook founder insisted in the post, which he said was previously shared within the organization, that Haugen's testimony "doesn't reflect the company we know."

"We care deeply about issues like safety, well-being and mental health," he continued. "It's difficult to see coverage that misrepresents our work and our motives."

Of note:  Zuckerberg said the notion "that we prioritize profit over safety and well-being" at the heart of Haugen's testimony is "just not true."

He pointed to a major change to Facebook's News Feed to "show fewer viral videos and more content from friends and family," and said Facebook did this "knowing it would mean people spent less time on Facebook, but that research suggested it was the right thing for people's well-being."

Zuckerberg suggested the company welcomed oversight and "advocated for updated internet regulations for several years now." 

"If we wanted to ignore research, why would we create an industry-leading research program to understand these important issues in the first place? ... If we wanted to hide our results, why would we have established an industry-leading standard for transparency and reporting on what we're doing?"

Zuckerberg rebuts Facebook whistleblower testimony

"It's difficult to see coverage that misrepresents our work and our motives," he wrote.

A man in a suit and tie speaking, seen on a tablet device placed on a table in a darkened room.

Mark Zuckerberg speaks virtually during a House Energy and Commerce Subcommittee hearing in March, as seen on a laptop. Photo: Daniel Acker/Bloomberg via Getty Images

Facebook

Snap Inc. has hired Jacqueline Beauchere, the current chief online safety officer at Microsoft, to be its first-ever global head of platform safety, a spokesperson tells Axios. 

Why it matters: The move reflects a growing effort by Snapchat to invest in more initiatives that focus on user safety and wellbeing.

For example, Snap launched its first-ever digital literacy program in January. Last year, it launched new features with the meditation app Headspace. 

Snapchat was designed to be mindful of issues like privacy, misinformation and harassment, which has, to date, helped it avoid some of the regulatory headaches that its competitors are now dealing with. 

Details: In her new role, Beauchere will oversee all of Snapchat's efforts around safety. She will also help advise on the development of new policies and guidelines, features and tools around safety and well-being, per a spokesperson. 

Beauchere will report to Snap VP of global policy Jennifer Stout and will work closely with other internal teams that support Snapchat's safety and wellness efforts.

“We are committed to helping parents, stakeholders and advocates understand how young people experience our products and how we approach critical issues around safety and trust," said Stout. 

"There is no one better suited to help us accomplish this than Jacqueline, and this work will only become more important as we deepen our focus into augmented reality and the future of computing.”

Catch up quick: Beauchere has long been an online safety advocate, having sat on numerous boards that represent child safety and cyber safety in the technology industry. She previously served as Microsoft’s representative to the Family Online Safety Institute and the National Cyber Security Alliance, among others. 

The big picture: She's part of a growing list of senior executives that Snapchat has poached from its Big Tech competitors recently. 

Snap hires first Global Head of Platform Safety

The latest hire reflects Snapchat's growing focus on user safety and wellbeing.

Snapchat

Axios Sneak Peek

Former Obama aide Jim Messina is joining the board of Blockchain.com in anticipation of enhanced regulation from the Biden administration and other governments for its business trading and processing digital coins.

Scoop: Jim Messina aims to shape cryptocurrency future

Cryptocurrency companies are currently operating in a regulatory no man’s land.

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