Elon Musk tries again to escape FTC audits of X data handling

Musk lost his previous lawsuit after the court found it had no authority to amend or end the FTC’s order. Musk is trying again with new arguments, complaining in a May petition to the FTC that they should set aside the order “without delay.” According to Musk, the FTC should stop its monitoring because Twitter no longer exists, as X was merged into xAI, and then xAI was folded into SpaceX. Musk also argues that since none of the leadership or engineers responsible for the two-factor authentication error remain at the company, and “X has since built a world-class privacy and data-protection program” that protects consumers, the FTC doesn’t have to intervene anymore. The company further argued that it has paid $17 million in “needless costs,” since a lawsuit over the same two-factor authentication issue ended with a verdict in Twitter’s favor. If a court found that Twitter’s privacy policy adequately informed users that their contact info might be used for ad targeting, then the FTC should not be able to continue punishing X for that behavior, Musk argued. “The factual foundation of the FTC’s complaint has been dismantled,” X says. “And the Order’s staggering costs—imposed on both the Company and on the Commission itself are unjustifiable.” As X sees it, the order also requires the company to duplicate compliance efforts, because X already must take extra precautions with data to comply with laws such as the European Union’s General Data Protection Regulation (GDPR). Finally, X raised two other claims to justify tossing the order. First, X claimed that allowing the FTC to maintain the order would chill speech on X, because it supposedly “creates a permanent mechanism through which future regulators can pressure the Company over the viewpoints it hosts.” And second, X argued that Donald Trump’s AI Action Plan requires government agencies to drop orders such as this one. Since X is “at the center of a family of companies—including xAI—that are at the forefront of America’s AI ambitions,” the FTC risks running afoul of Trump’s decree to eliminate unnecessary bureaucracy, if the agency’s order keeps on diverting X “engineering resources from innovation to compliance paperwork,” the petition says. Musk wants the order either dropped immediately or by the end of this year, as he says X will face another year of compliance costs. Not everyone submitted anonymously. One of the first commenters, Amanda Collins, wrote that Musk’s relationship with the Trump administration should not influence the decision. She urged the FTC to continue to “operate from a position of protecting the American public and not shielding oligarchs from consequences.” The most substantive comment so far came from William Pate II, who argued that X’s merger should not be a reason to drop the order. Rather, the FTC’s monitoring of X data handling only becomes more critical, since the combined entity likely has “strong commercial incentives to train AI on user data.” That “makes the order’s privacy review requirements more relevant, not less,” Pate wrote. Pate also suggested that the FTC should consider two post-acquisition data breaches by X: 200 million records in 2023 and 2.8 billion profiles in 2025. Those breaches do not suggest that X gets a gold star for data privacy, the commenter suggested, while also shooting down X’s claims about its GDPR compliance efforts ensuring consumer protection. “The Irish Data Protection Commission’s 2024 formal inquiry into X Corp.’s use of user data to train the Grok AI model without adequate consent” is “evidence that X Corp. does not treat existing regulatory frameworks as self-executing” and undermines X’s GDPR claims, Pate suggested. “The order runs through 2042 because the Commission concluded that a repeat offender required sustained oversight,” Pate wrote. “X Corp. is four years into that period. Nothing in the petition establishes that the concerns underlying that judgment have been resolved.” To defeat the order, X will likely first have to show that the order’s safeguards are either unworkable or contrary to the public interest, and then that there’s no other way to remedy alleged harms than to terminate it. Last time that Musk tried, the FTC held firm, arguing that Musk was seeking to terminate the order because he was “hoping to limit the FTC’s investigation into alarming developments related to its data privacy and security practice.”