The company revealed the expected scope of the fine in a 10-Q filing with the SEC. Twitter said that on July 28 it received a draft complaint from the Federal Trade Commission alleging the company violated a 2011 consent order, which required Twitter to establish an information-security program designed to “protect non-public consumer information.”
“The allegations relate to the Company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019,” Twitter said in the filing.
Twitter’s alleged violations of the FTC order are unrelated to the massive July 15 hack by cybercurrency scammers, in which the attackers hijacked and sent tweets from 40 accounts, including those of Joe Biden, Barack Obama, Elon Musk and Kanye West.
Twitter received the letter from the FTC after it reported second quarter results. The company said it recorded an accrual of $150 million, included on its balance sheet for Q2, related to the FTC probe. Twitter noted in the 10-Q filing that the matter “remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”
The 2011 FTC order will remain in effect until March 2, 2031 — or, if the U.S. government or FTC files a complaint in federal court that Twitter violated that, it would extend 20 years after that date.
“We expect to continue to be the subject of regulatory inquiries, investigations and audits in the future by the FTC and other regulators around the world,” Twitter said in the filing Monday.
For the second quarter, Twitter’s average monetizable daily active users increased 34% year over year to 186 million, a record quarterly gain of 20 million. The company missed Wall Street expectations, as revenue declined 19%. The company didn’t provide Q3 guidance except to say it expects total costs and expenses to increase 10% or more year-over-year, as it plans to increase capex spending in infrastructure “to support audience growth and product innovation.”
Twitter chief exec Jack Dorsey also told analysts that the company would probably start testing a subscription service later in 2020.