There’s plenty of ongoing tension between the regulators and the big tech giants. Just recently, four of the largest tech and social media giants were summoned to a historical meeting with lawmakers on Capitol Hill. Since then, the attention surrounding these companies and the power they hold has continued to grow. At the same time, regulatory scrutiny surrounding these businesses isn’t letting up either. Twitter (NYSE: TWTR) stated on Monday that it might end up facing significant fines due to privacy violations that date back all the way to 2011.
The social media giant went on to say that the Federal Trade Commission (FTC) had been investigating the company for a while now. The issue in question had to due to supposedly violating the privacy rights of Twitter users back in 2011, in which the social media giant used private date – phone numbers in this case – to produce more targeted ads towards their users.
While things aren’t set in stone yet in terms of punishment and possible fines, Twitter did say that it received a draft complaint from the FTC back on July 28th regarding this issue. While the violation first started back in 2011, Twitter had apparently continued to employ this targeted advertising to specific users in the years following the initial privacy breach. The FTC went on to say that it would fine the company between $150 million and $250 million, although things could change in the upcoming future.
While paying as much as $250 million isn’t that big of a fine for a company the size of Twitter’s, it would be a symbolic gesture more than anything else. For one, it signifies a pretty big change in how regulators perceive social media companies. At the same time, it could be a sign to come off much larger fines and legal issues for social media giants down the road. The FTC refused to comment when asked about this situation with Twitter.
Investors have already seen a similar, albeit much more severe circumstance with how the FTC has dealt with other social media giants. In particular, the FTC recently reached a $5 billion settlement with Facebook, the largest fine that the commission has ever issued in its history. The settlement was also related to the supposed mishandling of private data on the part of Facebook.
Shares of Twitter are down around 2% right now in pre-market trading and are likely to dip a little bit in response to the news as markets open up on Tuesday. While most tech giants and social media companies seem to have done fairly well for themselves in 2020, Twitter’s stock performance has been mediocre. Shares are trading just a little bit higher than when they started the year at.
Twitter Company Profile
Twitter is an open distribution platform for and a conversational platform around short-form text (a maximum of 140 characters), image, and video content. Its users can create different social networks based on their interests, thereby creating an interest graph. Many prominent celebrities and public figures have Twitter accounts. Twitter generates revenue from advertising (90%) and licensing the user data that it compiles (10%). – Warrior Trading News
