Twitter Stock Dips After Whistleblower Reports “Egregious” Cybersecurity Lapses

Twitter shares fell Tuesday after reports that its former security chief, disturbed by lax cybersecurity policies, filed a whistleblower complaint with federal agencies.

Twitter responded that it had fired the executive, Pieter Zatko, in January for what it claims was poor performance, and that security and privacy are “company-wide priorities.”

The news comes at a particularly sensitive time for Twitter in the midst of a legal battle with Elon Musk to force the billionaire Tesla founder to follow through on his agreement to buy the company. Musk, who inked the $44 billion deal April deal and terminated it in July, has accused Twitter of equivocating on the number of fake, or spam, accounts on its platform. Twitter sued him in Delaware Chancery Court and a trial is set for October.

Twitter shares have rallied recently but are down 3.5% in midmorning trade at $41.

Zatko’s complaint alleges “extreme, egregious deficiencies” in Twitter’s policies. It said too many employees had access to sensitive information and oversight was inadequate. Zatko also alleges that some senior executives tried to cover up the issues. Zatko, according to the Post, said that Twitter had violated the terms of an 11-year-old settlement with the FTC by falsely claiming that it had a solid security plan. He said in the complaint he warned colleagues that half of Twitter’s servers were running old software. He said executives withheld data about breaches of and lack of protection for user data.

He alleges, according to the Post, that CEO Parag Agrawal was “lying” in a May tweet that the company is “strongly incentivized to detect and remove as much spam as we possibly can.” Bonuses and incentives, he says. were tied to increasing users, not stamping out spam.

Subpoenas have been flying ahead of the trial. Yesterday, the Musk camp sent one to Jack Dorsey, the founder and former CEO. He had been a friend and ally of Musk in the takeover but hasn’t been heard from since the the deal went south and litigation started.

Dorsey hired Zatko in 2020 after a major breach.

The Post said the complaint was filed with the FTC, which is looking into it, the SEC and the DOJ and a redacted version was sent to Congress.

According to a Twitter spokesperson, “Mr. Zatko was fired from his senior executive role at Twitter in January 2022 for ineffective leadership and poor performance. What we’ve seen so far is a false narrative about Twitter and our privacy and data security practices that is riddled with inconsistencies and inaccuracies and lacks important context. Mr. Zatko’s allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders. Security and privacy have long been company-wide priorities at Twitter and will continue to be.”

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