TECH OF THE TOWN

TWITTER CHAOS PUTS MUSK IN WASHINGTON’S SIGHTS — In case you missed it, a lot went down Thursday with Elon Musk’s Twitter: from impersonation accounts popping up across the site to top privacy and security execs departing the company. The ruckus spurred a rare response from the FTC, signaling the tech mogul will be watched closely by Washington.

— Where to begin? What really sparked the fire was Wednesday night’s rollout of Twitter’s new subscription policy, which allows users to pay $8 a month for “blue check” verification. The rollout triggered a wave of fake “verified”accounts , which impersonated public figures including former President Donald Trump and President Joe Biden.

Though many accounts were successfully taken down, the company is struggling to keep up after mass layoffs last week .

These events also came just hours after Biden said he’d support a review of foreign investors backing Musk’s Twitter buy. Recent reports also suggest the Treasury Department’s Committee on Foreign Investment in the United States may be reviewing Saudi investments in the company. Sen. Chris Murphy (D-Conn.) also urged CFIUS in late October to investigate foreign investors in Musk’s purchase.

— Peace out: Among the top executives who resigned in the last 48 hours: the company’s top cybersecurity officer and the chief privacy and compliance officers, according to a message posted on Twitter’s Slack from an attorney on the company’s privacy team.

— But wait … there’s more: That same Slack message warned employees that the FTC will likely impose hefty fines on the company for violating consent decrees it has with the agency.

The FTC, in an unusual move, made it known in a statement Thursday that it’s keeping a close eye on the company: “Weare tracking recent developments at Twitter with deep concern. No CEO or company is above the law, and companies must follow our consent decrees.”

— But speaking of the FTC … : The FTC Thursday morning issued a new policy statement that, through Section 5 of the FTC Act, seeks to expand its use of a relatively little-known authority in enforcing competition laws in markets across the economy, which quickly sparked both criticism and praise from lobbying groups.

Section 5 allows the FTC to bypass requirements put in place by the Sherman Act, giving the agency more power to take action against businesses it deems are in violation of antitrust laws. Now, most cases brought under Section 5 will no longer be given the opportunity to justify practices the agency says violate laws.

NetChoice, a tech trade group, criticized the new rule in a statement saying it’s a “radical departure from the existing consumer harm focus of the FTC,” and is calling on Congress to investigate. Carl Szabo, vice president and general counsel at NetChoice, said in an email to MT that the likely incoming Republican-controlled House should “forcefully exert its oversight authority.”

The new rule is likely to face challenges in the courts and by lawmakers as the agency starts taking action, though some experts say it has adequate legal standing.

“I have no doubt that as soon as the FTC brings enforcement action under Section 5, whoever it’s against is going to challenge that authority,” said Katherine Van Dyck, senior legal counsel for the American Economic Liberties Project. “Now the question is, will they succeed? And I think … there’s really good precedent supporting the way [the agency] wants to enforce Section 5.”

— (Not really) uncharted territory: Congress passed the FTC Act in 1914 because it was dissatisfied with enforcement of the Sherman Act, and the agency brought cases under Section 5 for decades. So Section 5 enforcement is hardly unprecedented. It was only in 2015 that the regulator declared it would bring Section 5 cases only if they also fit within the Sherman Act.

“When Congress passed Section 5 in the FTC Act, it recognized that there were real weaknesses in the Sherman Act and in the Clayton Act,” said Van Dyck. “So Congress created the FTC and gave it these really broad rulemaking and investigative powers so that they could address anticompetitive behaviors that might not be actionable under the existing laws.”