Snap CEO Evan Spiegel joins CNBC ‘Power Lunch’ on September 17, 2024.
CNBC
Snap shares closed down 5% on Thursday after the Federal Trade Commission said it would send a complaint against the company to the Justice Department.
The FTC’s non-public complaint includes allegations that Snapchat’s My AI chatbot poses “risks and harms to new users,” the commission said in a statement. The complaint stems from the FTC’s compliance reviews of Snap following a 2014 settlement over allegations of public fraud related to the company’s data collection.
As part of the FTC’s compliance reviews of Snap, the agency said it had discovered the possibility that the company “is violating or is about to violate the law.”
“A proceeding is in the public interest,” the FTC said in its statement.
The FTC did not specify what the My AI chatbot complaint focused on, but the chatbot has been subject to it before.
A spokesperson for Snap pushed back against the FTC’s claims in a statement to CNBC.
“Unfortunately, on the last day of this administration, a divided FTC decided to vote down a proposed complaint that ignores any of these efforts, is based on inaccuracies and lacks concrete evidence,” the Snap spokesperson said. “It also fails to identify any tangible harm and is subject to serious First Amendment concerns.”
The spokesperson added that while the company shares “the FTC’s focus on ensuring the thoughtful development of generative AI,” Snap believes “the complaint would stifle innovation and competition in a critical and growing sector of the economy.”
Snap debuted the My AI chatbot in 2023. It’s powered by OpenAI and Google’s big language models, giving it the ability to answer user questions and provide tips and suggestions similar to ChatGPT and other chat tools. HE.
Chatbot is famous for providing problem answers. In one instance, while talking to a reporter pretending to be a teenager, the chatbot answered how to hide the smell of alcohol and marijuana, the Washington Post reported in 2023. At the time of the chatbot’s initial release, Snap said that My AI, like other AI-powered chatbots, is “prone to hallucinations and can be tricked into saying almost anything. Please be aware of the many shortcomings and apologize in advance!”
In October 2023, the UK Information Commissioner’s Office issued a preliminary enforcement notice to Snap, claiming that the company’s My AI risk assessment “did not adequately assess the data protection risks posed by the technology generative AI, especially for children”.
Although the FTC said it voted during a closed-door meeting to issue a public statement about its case against Snap and its subsequent referral to the DOJ, it noted that FTC Commissioners Melissa Holyoak and Andrew Ferguson were absent.
The FTC also noted a dissenting statement from Ferguson, whom President-elect Donald Trump nominated in December to replace Lina Khan as the next FTC chair.
Ferguson noted that these types of referrals “are not disclosed unless and until a complaint is filed in court by the Department or the Commission.”
“I did not participate in the farcical closed meeting in which this issue was approved,” he wrote.
Ferguson added that he disputes the FTC’s complaint against Snap, but that he cannot “release a detailed analysis of its many problems” because the case is not public. Ferguson wrote that the complaint’s interpretations of an FTC law are “wrong” and that it is “in direct violation of First Amendment guarantees.”
If the DOJ files the complaint, Ferguson said he will “issue a more detailed statement regarding this affront to the Constitution and the rule of law.”
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