Snap shares fall as FTC refers MyAI chatbot complaint to DOJ

Snap shares closed up 5% on Thursday after the Federal Trade Commission said it would refer a complaint against the company to the Justice Department.

The FTC’s non-public complaint alleges that Snapchat’s My AI chatbot poses “risks and harms to young users,” the commission said in a statement. The complaint stems from the FTC’s compliance reviews with Snap following a 2014 one settlement regarding 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 revealed the possibility that the company is “violating or violating the law.”

“A proceeding is in the public interest,” the FTC said in its statement.

The FTC didn’t specify what its complaint focused on about the My AI chatbot, but it has reviewed the chatbot before.

A Snap spokesperson 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 on a proposed complaint that ignores any of these efforts, relies on inaccuracies, and lacks concrete evidence,” a Snap spokesperson said. “It also fails to identify 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 creative AI,” Snap believes the “complaint will stifle innovation and competition in a critical and growing sector of the economy.”

Snap debut My AI chatbot in 2023. That’s it powered Based on OpenAI and Google’s big language models, providing the ability to answer user questions and provide tips and suggestions similar to ChatGPT and other AI-related chat tools.

The chatbot has been noted for providing problematic answers. In one instance, while talking to a reporter pretending to be a teenager, the chatbot explained how to mask the smell of alcohol and marijuana, The Washington Post reported. notify in 2023 In the initial release of the chatbot, Snap he said My AI, like other AI-powered chatbots, is “prone to hallucinating and can be tricked into saying almost anything. Please be aware of its many shortcomings and apologize in advance!”

October 2023, UK Information Commissioner’s Office issued A preliminary enforcement notice against Snap, alleging the company’s My AI-related risk assessment “failed to adequately assess the data protection risks posed by the creator’s AI technology, particularly for children.”

The FTC said it voted in a closed-door meeting to issue a public statement on the lawsuit against Snap and subsequent referral to the DOJ, FTC Commissioner Melissa Holyoak and Andrew Ferguson said.

The FTC also stated a contrary statement Ferguson, who elected Donald Trump president He was appointed in December To replace Lina Khan as the next FTC chair.

Ferguson noted that these types of referrals “are not disclosed unless and until the Department or Commission files a complaint in court.”

“I did not participate in the farcical closed meeting where this matter was approved,” he wrote.

Ferguson added that the FTC opposes the complaint against Snap, but that it cannot “release a detailed analysis of many of the issues” because the case is not public. Ferguson wrote that the complaint’s interpretation of an FTC law is “wrong” and “in direct conflict with First Amendment guarantees.”

If the DOJ files a complaint, Ferguson said, “it will release a more detailed statement about this attack on the Constitution and the rule of law.”

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