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A consortium of US states announced on Wednesday a joint investigation into TikTok’s possible harms to young users of the platform, which has boomed in popularity especially among children.
Officials across the United States have launched their own probes and lawsuits against Big Tech giants as the national government has failed to pass new regulations due in part to partisan gridlock.
The consortium of eight states will look into the harms TikTok can cause to its young users and what the company knew about those possible harms, said a statement from California attorney general Rob Bonta.
Leading the investigation is a coalition of attorneys general from California, Florida, Kentucky, Massachusetts, Nebraska, New Jersey, Tennessee and Vermont.
The investigation focuses, among other things, on TikTok’s techniques to boost young user engagement, including efforts to increase the frequency and duration of children’s use.
“We don’t know what social media companies knew about these harms and when,” Bonta said in a statement.
“Our nationwide investigation will allow us to get much-needed answers and determine if TikTok is violating the law in promoting its platform to young Californians,” he added.
TikTok’s short-form videos have boomed in popularity with the youngest users, prompting growing concern from parents over the potential their children could develop unhealthy use habits or be exposed to harmful content.
– Series of probes and lawsuits –
The platform welcomed the investigation as a chance to be provide information on its efforts to protect users.
“We care deeply about building an experience that helps to protect and support the well-being of our community,” TikTok’s statement said.
“We look forward to providing information on the many safety and privacy protections we have for teens,” it added.
Social media’s impact on young users came under renewed scrutiny last year when Facebook whistleblower Frances Haugen leaked a trove of internal company documents raising questions over whether it had prioritized growth over users safety.
The documents were given to lawmakers, a consortium of journalists and US regulators by Haugen, who has become a figurehead of criticism of the leading social media platform.
While the rush of media attention on the issue and hearings before US lawmakers, no new rules have drawn close to being enacted on the national level.
States have instead proceeded with their own efforts to look into Big Tech companies, but also lawsuits seeking to force the firms to make changes on matters such as privacy protection.
For example, a consortium of US states announced a joint probe in November of Instagram’s parent company Meta for promoting the app to children despite allegedly knowing its potential for harm.
The consortium of attorneys general — states’ top law enforcers and legal advisors — included some of the same states as Wednesday’s probe like California, Florida.
Instagram sparked fierce criticism for its plans to make a version of the photo-sharing app for younger users, but later halted development.
New Legal Challenges Could Further Impact Elon Musk’s Twitter Takeover Push
So as the fifth week of the Elon Musk Twitter takeover drama comes to a close, let’s just check in on how things are progressing.
Oh, it’s bad. Nothing good to see here.
This week, as Musk maintains that his $44 billion takeover offer remains ‘on hold’ due to questions over the accuracy of Twitter’s claim that 5% of its active users are fake, Twitter itself has faced its own drama, connected to the takeover push.
Having already lost several top executives, either directly or indirectly stemming from the pending change in ownership (as well as former CEO Jack Dorsey exiting the company entirely), Twitter is now facing a battle over its board members, with Silver Lake Partners’ Egon Durban resigning from the board after Twitter shareholders blocked his re-election.
Durban was given a Twitter board seat in 2020, following a push by Elliott Management Group to buy up Twitter shares, and force Jack Dorsey out of his position as CEO. Elliott’s view was that Dorsey was underperforming, and it partnered with Silver Lake to put pressure on the company to either improve its bottom line, or accept a change in management.
In addition to his work with Twitter and various other public companies, Durban has also been a longtime ally of Elon Musk, and earlier this week, Twitter shareholders voted to stop Durban from being re-appointed, in a move that many viewed as a statement of protest, of sorts, from Twitter investors.
But as with all things Elon and Twitter, it’s not that simple – today Twitter itself has refused to accept Durban’s resignation.
In a statement to the SEC, Twitter explained that Durban’s board re-election was likely rejected by shareholders due to him also serving on the board of six other publicly traded companies. Durban has vowed to take a step back from these other commitments, which Twitter says is enough to keep him on its team.
As per Twitter:
“While the Board does not believe that Mr. Durban’s other public company directorships will become an impediment if such engagements were to continue, Mr. Durban’s commitment to reduce his board service commitment to five public company boards by the Remediation Date appropriately addresses the concerns raised by stockholders with regard to such engagements. Accordingly, the Board has reached the determination that accepting Mr. Durban’s Tendered Resignation at this time is not in the best interests of the Company.”
Why does Twitter want to keep Durban on? It’s hard to say – especially given that Musk has noted that he’ll be looking to eliminate Twitter’s board if/when he becomes the platform’s owner.
The inclusion of representatives from key investors, however, may ensure Twitter maintains a level of stability, in case the deal goes south.
And there could be another key reason to maintain the link between Twitter’s board and Musk.
On another front, Twitter shareholders are also mulling a class-action lawsuit against Elon Musk over his Twitter takeover push, based on the allegation that Musk has ‘violated California corporate laws on several fronts’ with his Twitter acquisition commentary, effectively engaging in market manipulation.
As reported by CNBC:
“In one potential violation, they claim that Musk financially benefited by delaying required disclosures about his stake in Twitter and by temporarily concealing his plan in early April to become a board member at the social network. Musk also snapped up shares in Twitter, the complaint says, while he knew insider information about the company based on private conversations with board members and executives, including former CEO Jack Dorsey, a longtime friend of Musk’s, and Silver Lake co-CEO Egon Durban, a Twitter board member whose firm had previously invested in SolarCity before Tesla acquired it.”
Maybe that’s why Twitter wants to keep Durban in-house, due to both his past dealings with Musk, which may help ease the deal through, or to assist shareholders in their class action.
Durban’s current participation likely doesn’t hold any additional legal clout in this respect, but there may be some linkage between these two aspects of the increasingly messy Twitter deal.
And yes, there is still a possibility that the Musk takeover may not happen.
Musk himself has repeatedly and publicly vowed that he will not pay for the company unless it can convince him that its data on fake profiles is accurate – though Twitter maintains that there’s no such thing as the deal being ‘on hold’ and it’s continuing to prepare for the final transaction to be approved.
But there may also be other complications, with the SEC now investigating Musk’s conduct in the lead-up to his Twitter takeover push. Add to that his many public criticisms and disclosures, which border on market manipulation (as per the proposed shareholder action) and there could well be a breakpoint for Musk’s Twitter deal, where authorities simply veto the process entirely due to his conduct.
Could that be Musk’s plan? Various analysts have suggested that Musk is looking for a way out of the acquisition, and while the overall sentiment is that Musk will, eventually, be forced to pay-up, and take ownership of the app, there are still some legal cracks that he could explore that could end the transaction.
Which would be a disaster for Twitter.
While investors are unhappy with Musk right now, especially since his various comments and critiques have tanked the stock, Musk walking away would leave Twitter in a much lesser state, with many product leaders gone, and a declining share price that would be difficult to correct, given the various questions raised by Musk about its processes.
Could Twitter get itself back on track, and back to growth, if Musk were to abandon his takeover push?
In essence, Musk walking away would be a big, public statement that Twitter is not a good investment, and as the media hype dies down, that could see interest in the app decline even further, harming growth for, potentially, years to come.
Maybe that, then, is Musk’s real intent here – to harm the company so much that it has no choice but to accept a lower offer price, which could save Elon himself millions in his takeover bid.
Either way, right now, it’s not looking good, and there are many moving parts that must be keeping current Twitter CEO Parag Agrawal up at night.
It still seems like the Elon era is coming, but when, exactly, is a whole other question.
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