Twitter has agreed to pay $150 million (about Rs 1,164 crore) to settle allegations that it misused private information, such as phone numbers, to target ads after telling users the information would be used for security reasons, according to court documents filed on Wednesday.
Twitter’s settlement covers allegations that it misrepresented the “security and privacy” of user data between May 2013 and September 2019, according to court documents.
The company will pay $150 million as part of the settlement announced by the Department of Justice and the Federal Trade Commission (FTC). In addition to the monetary settlement, the agreement requires Twitter to improve its compliance practices.
The complaint said the misrepresentations violated FTC law and a 2011 settlement with the agency.
Specifically, the complaint said, while Twitter made it clear to users that it collects their phone numbers and email addresses to secure their accounts, Twitter failed to disclose that it also used user contact information to help advertisers reach their preferred audience.
Twitter’s chief privacy officer, Damien Keran, said in a statement that with the settlement “we’ve agreed with the agency about operational updates and software improvements” to protect user privacy and security.
Twitter is a free service that makes money primarily through ads. Billionaire Elon Musk, who is buying the service for $44 billion (about Rs 3,41,300 crore), has criticized the ad-driven business model and vowed to diversify its revenue sources.
Commenting on the social media company’s ad practices and the fine, Musk said in a tweet late Wednesday, “If Twitter isn’t being honest here, what else isn’t? This is very disturbing news.”
US officials indicated that of the $3.4 billion (about Rs.26,389 crore) revenue that Twitter generated in 2019, about $3 billion (about Rs.23,284 crore) was from ads.
The company generated $5 billion (about Rs 38,806 crore) in revenue for 2021. It said in a statement earlier this month that it had set aside $150 million after agreeing “in principle” to a penalty with the Federal Trade Commission.
“Twitter obtained data from users on the pretext of harnessing it for security purposes, but it also ended up using the data to target users with ads,” Federal Trade Commission Chair Lina Khan said in a statement. “This practice has affected more than 140 million Twitter users, while boosting Twitter’s primary source of revenue.”
The complaint also alleges that Twitter falsely said it complied with the EU-US-Switzerland-US Privacy Shield Framework, which prevents companies from using data in ways that consumers do not authorize.
Twitter’s settlement comes after years of fallout over the tech companies’ privacy practices.
It was revealed in 2018 that Facebook, the world’s largest social network, was using phone numbers provided for two-factor authentication to serve ads that angered privacy advocates.
Facebook, now called Meta, similarly settled with the FTC over the issue as part of a $5 billion agreement reached in 2019.
© Thomson Reuters 2022