Snap shares drop as FTC refers MyAI chatbot complaint to the DOJ

snap The stock closed down 5% on Thursday after the Federal Trade Commission said it would refer a complaint against the company to the Department of Justice.

The FTC’s non-public complaint involves allegations that Snapchat’s My AI chatbot poses “risks and harms to young users,” the commission said in a statement. The complaint comes from the FTC’s compliance reviews with Snap after a 2014 establishment regarding the allegations of public deception related to the collection of data by the company.

As part of the FTC’s compliance reviews of Snap, the agency said it had uncovered the possibility that the company “is violating or is about to violate the law.”

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

The FTC did not specify what about the My AI chatbot was focused its complaint, but the chatbot has already done an examination.

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 down a proposed complaint that does not consider any of these efforts, is based on inaccuracies, and lacks concrete evidence,” said Snap’s spokesperson. “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 stifles innovation and competition in a critical and growing sector of economy”.

snap debuted the My AI chatbot in 2023. It is fed from the great language models of OpenAI and Google, giving you the ability to answer user questions and provide tips and suggestions similar to ChatGPT and other AI-powered chat tools.

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

In October 2023, the UK Information Commissioner’s Office issued a preliminary injunction against Snap, accusing that the company My AI-related risk assessment “did not adequately assess the data protection risks presented by generative AI technology, particularly to 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 pointed out a dissenting statement from Ferguson, which President-elect Donald Trump called in December to replace Lina Khan as the next FTC chair.

Ferguson noted that these types of references “are not disclosed unless and until the complaint is filed in court by the Department or the Commission.”

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

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

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

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