Snap shares closed down 5% on Thursday following the Federal Trade Commission’s announcement that it would refer a complaint against the company to the Department of Justice. The FTC’s complaint, which has not been made public, alleges that Snapchat’s My AI chatbot poses risks to young users. This complaint is a result of the FTC’s compliance reviews with Snap after a 2014 settlement related to public deception accusations regarding data collection by the company.
During the compliance reviews, the FTC found indications that Snap may be violating or about to violate the law. The FTC stated that a proceeding is in the public interest. The specifics of the complaint against the My AI chatbot were not disclosed by the FTC, although the chatbot has faced scrutiny in the past.
In response to the FTC’s claims, a Snap spokesperson disputed the allegations, stating that the proposed complaint lacks consideration of Snap’s efforts, contains inaccuracies, lacks concrete evidence, and raises First Amendment concerns. Snap shares the FTC’s focus on responsible AI development but believes the complaint could hinder innovation and competition in the sector.
Snap introduced the My AI chatbot in 2023, powered by OpenAI and Google’s language models. The chatbot can answer questions and provide suggestions. However, it has been criticized for providing problematic responses, such as offering advice on concealing alcohol and marijuana smells. The UK’s Information Commissioner’s Office also raised concerns about the chatbot’s risk assessment related to data protection, particularly for children.
The FTC’s decision to issue a public statement about the case against Snap and refer it to the DOJ was made during a closed meeting. Notably, two FTC commissioners were absent, and a dissenting statement was issued by Andrew Ferguson, who opposed the complaint. Ferguson criticized the complaint’s interpretation of FTC law and its implications for the First Amendment. If the DOJ proceeds with the complaint, Ferguson plans to provide a more detailed response.
Snap CEO on earnings beat and new advertising products.
