The FTC should investigate whether Twitter misled users about its security risks and violated a 2011 consent decree with the commission (see 2205260054), Sens. Richard Blumenthal, D-Conn., and Ed Markey, D-Mass., wrote in separate letters Tuesday. Senate Judiciary Committee Chairman Dick Durbin, D-Ill., also sounded the alarm on reports about how Twitter, according to Markey, “systematically and repeatedly failed to take basic security measures to protect its user data and has misled investors, regulators, and the public about the strength of its security systems.” Blumenthal cited information from whistleblower Peiter Zatko, a senior cyber executive for the company 2020-22: “These troubling disclosures paint the picture of a company that has consistently and repeatedly prioritized profits over the safety of its users and its responsibility to the public, as Twitter executives appeared to ignore or hinder efforts to address threats to user security and privacy.” Zatko was fired in January for “ineffective leadership and poor performance,” a Twitter spokesperson said Tuesday. “What we’ve seen so far is a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context.” His “allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders.” Allegations of “widespread security failures at Twitter, willful misrepresentations by top executives to government agencies, and penetration of the company by foreign intelligence raise serious concerns,” said Durbin. Durbin said he will continue investigating and take further steps as needed. The company entered into its 2011 consent decree with the FTC and DOJ. The FTC confirmed receiving the letters but didn’t comment.
Ohio will lead a class-action lawsuit against Facebook claiming the platform “misled” users about how a “proprietary algorithm promoted offensive and dangerous content to users,” a federal judge decided Wednesday. "This case is about lies and losses -- Facebook's lies, and the losses incurred by our pension systems and others," said Ohio Attorney General Dave Yost (R), concerning the filing before the U.S. District Court in Northern California. "Ohio is happy and determined to lead in enforcing accountability against Facebook." Ohio will be joint lead plaintiff with PFA Pension of Denmark. Between April and October 2021, the company and senior executives “violated federal securities laws by purposely misleading the public about the negative effects its products have on the health and well-being of children,” Yost’s office said. “Those misrepresentations boosted the price of Facebook stock, harming investors.” Yost represents the Ohio Public Employees Retirement System. “Ohio PERS and PFA Pension are the presumptive lead plaintiff by virtue of having the largest financial interest,” Judge Jon Tigar wrote in his ruling. Yost claims that testimony from Facebook whistleblower Frances Haugen caused the company’s stock to plummet, resulting in about $3 million losses for the Ohio Public Employees Retirement System. The company didn’t comment.
Northstar Wireless and SNR Wireless, faced with a straightforward U.S. Court of Appeals for the D.C. Circuit decision, are trying to rewrite that decision and the underlying False Claims Act itself, Vermont National Telephone (VNT) said Friday in a response to the defendant-appellee designated entities' petition for rehearing or rehearing en banc (docket 21-7039). They're challenging a D.C. Circuit panel's decision to reverse a dismissal of fraud claims by VNT for the 2015 AWS-3 auction (see 2206160075). The D.C. Circuit and the False Claims Act are clear that an FCC licensing proceeding where it can't levy monetary penalties isn't an administrative civil money penalty proceeding, VNT said. If Congress wanted every administrative proceeding to implicate the government action bar, it would have said so, VNT said. Counsel for the appellee didn't comment Monday.
The Senate Commerce Committee is poised to potentially mark up legislation that would establish a duty of care for social media platforms to protect children’s online privacy (see 2202160055), bill supporters told us.
SNR Wireless and Northstar Wireless asked the U.S. Court of Appeals for the D.C. Circuit for a rehearing or rehearing en banc of a panel's decision last month to reverse a dismissal of fraud claims by Vermont National Telephone in the 2015 AWS-3 auction (see 2205170026). The appellate court's reversal of a lower court's dismissal of VTEL's suit goes against Supreme Court precedent, they said Thursday in a docket 21-7039 rehearing petition. They said it also could "undermine critical limitations" Congress set for qui tam litigation, when a private party brings action on the government's behalf. Dish Network designated entities SNR and Northstar separately challenged the FCC's 2020 rejection of the AWS-3 bidding credits -- the second time the agency did so (see 2011230062).
The House Consumer Protection Subcommittee plans to mark up privacy legislation next week, Chair Jan Schakowsky, D-Ill., told reporters Tuesday, as expected (see 2206080054). An aide said those details aren’t yet official.
Vermont National Telephone claims of fraud by big winners in the 2015 AWS-3 auction are heading back to the U.S. District Court for the District of Columbia as the U.S. Court of Appeals for the D.C. Circuit on Tuesday reversed the lower court's dismissal of VTEL's Fair Claims Act suit. The FCC doesn't have the authority to assess financial civil penalties during licensing proceedings, so its evaluation of Northstar Wireless and SNR Wireless long-form applications and of petitions to deny them doesn't count as an "administrative civil money penalty proceeding" under the federal False Claims Act, the D.C. Circuit said (docket 21-7039). The act doesn't allow actions based on allegations or transactions subject to a civil suit or an administrative civil money penalty proceeding where the government is a party. The Circuit Court said it disagreed with the lower court finding that VTEL hadn't plausibly alleged any false claims that could influence Northstar and SNR eligibility for bidding credits in the auction. They said there are perhaps other reasonable justifications for SNR and Northstar actions in the auction, but VTEL allegations of undisclosed agreements to act on behalf of Dish Network and transfer AWS-3 spectrum rights to Dish are plausible. "We are pleased with the D.C. Circuit’s decision, and Vermont National Telephone Company looks forward to pursuing its claims against DISH and other defendants in federal district court," VTEL outside counsel emailed. Northstar, SNR and Dish outside counsel didn't comment. Deciding the appeal were D.C. Circuit Judges David Tatel, Judith Rogers and Cornelia PIllard, with Tatel penning the decision. Oral argument was March 3. The Dish designated entities are separately challenging the FCC's 2020 rejection of the AWS-3 bidding credits -- the second time the agency did so (see 2011230062).
The California Assembly’s Judiciary Committee unanimously passed legislation Tuesday to make social media platforms liable for addiction- and design-related harm to children. AB-2408 would impose penalties on major social media platforms for negligent design.
Antitrust filing fees should be increased and enforcer deadlines extended to reflect modern markets, FTC Chair Lina Khan said Friday. Congress’ assumptions when the Hart-Scott-Rodino Act passed in 1976 are now severely outdated, considering the recent surge in merger filings, she said during the American Bar Association’s antitrust law spring meeting in Washington.
President Joe Biden was to press Congress during his State of the Union speech Tuesday night to send a compromise bill marrying elements of the House-passed America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength Act (HR-4521) and Senate-passed U.S. Innovation and Competition Act (S-1260) to his desk as soon as possible, a White House official said in a Monday conference call with reporters. The House passed HR-4521 last month, but there has been no formal compromise between that measure and S-1260 (see 2202250054). Both U.S. tech competitiveness measures include $52 billion in subsidies to encourage U.S.-based semiconductor manufacturing (see 2201260062) but differ in other areas. Biden was expected to tout Intel’s plan to build two new chip factories in Ohio, for $20 billion (see 2201210027), during the speech, an administration official said. Intel CEO Pat Gelsinger and Facebook whistleblower Frances Haugen were to be among first lady Jill Biden’s guests at the speech, the White House said. Biden was also expected to tout the $65 billion in broadband money included in the Infrastructure Investment and Jobs Act as a way to provide internet access “to every family in America,” a White House official said. Biden was to separately announce Tuesday night a sweeping agenda to address a social media-linked children's mental health “crisis” (see 2203010072).