Elon Musk’s X Corp. loses fight to end FTC privacy oversight

X Corp. failed to persuade a federal judge to curb the US Federal Trade Commission’s close watch over the social media platform’s data privacy policies and block the agency from questioning company owner Elon Musk.

Elon Musk, owner of social media platform X, gestures during an event with Britain's Prime Minister Rishi Sunak in London on Nov. 2, 2023. (AP)

X Corp. failed to persuade a federal judge to curb the US Federal Trade Commission's close watch over the social media platform's data privacy policies and block the agency from questioning company owner Elon Musk.

US Magistrate Judge Thomas Hixson in San Francisco said in a ruling Thursday he was legally powerless to release the company, formerly known as Twitter, from FTC oversight. X Corp. had complained that after the billionaire bought the platform last year, the agency pursued an investigation that “has spiraled out of control and become tainted by bias.”

The judge also rejected X Corp.'s request to spare Musk from a deposition by government attorneys.

X Corp. didn't immediately respond to a request for comment.

The world's richest person, who has a history of challenging the authority of government regulators, is also resisting a subpoena from the US Securities and Exchange Commission in its probe of his purchases of Twitter shares ahead of his takeover of the company.

The court fight over X Corp.'s claims that the FTC is “harassing” Musk stems from the company's agreement last year to pay a $150 million fine over alleged misuse of user data and consent to agency supervision of its privacy protections. 

Hixson said the federal district court “lacks the power” to grant X Corp. any relief from its obligations under the FTC consent decree as it's an administrative order.

“The court also does not understand how it could order the FTC not to depose Musk,” Hixson wrote in his ruling, which was posted shortly after he held a brief hearing Thursday.

A whistle-blower complaint from Twitter's former head of security in 2022 cited severe shortcomings in the company's handling of users' personal data. Musk, who paid $44 billion for the company, hired an outside law firm to do an internal investigation into allegations about lax computer-security measures.

The FTC sought to depose Musk on July 25, according to a court filing by X Corp. FTC Chair Lina Khan declined to meet with him personally until his company complied with the information requests.

At the hearing, Justice Department lawyer Zachary Cowan argued that Musk should be questioned by Khan's agency as he had “first-hand knowledge” about the company's data practices and compliance efforts relevant to the FTC's probe.

The agency's conduct during the investigation is “so insidious” and Musk was being targeted as he's been a “vocal critic” of the Biden administration, Daniel Koffmann, an attorney for X Corp., told the judge.

Separately, Bloomberg reported in October that the SEC was investigating how Twitter managed a 2018 security lapse that exposed personal user information.

The case is US v. Twitter Inc., 3:22-cv-03070, US District Court. Northern District of California (San Francisco).