Whistleblower Accuses Twitter of Cybersecurity Negligence

Twitter app logo is seen in this illustration taken on August 22, 2022. (Reuters)
Twitter app logo is seen in this illustration taken on August 22, 2022. (Reuters)
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Whistleblower Accuses Twitter of Cybersecurity Negligence

Twitter app logo is seen in this illustration taken on August 22, 2022. (Reuters)
Twitter app logo is seen in this illustration taken on August 22, 2022. (Reuters)

A former head of security at Twitter alleged that the company misled regulators about its cybersecurity defenses, privacy protections and its ability to detect and root out fake accounts, according to a whistleblower complaint filed with US officials.

The revelation could create serious legal and financial problems for the social media platform, which is currently attempting to force Tesla CEO Elon Musk to consummate his $44 billion offer to buy the company.

Peiter Zatko, Twitter's security chief until he was fired early this year, filed complaints last month with the US Securities and Exchange Commission, the Federal Trade Commission and the Department of Justice. The legal nonprofit Whistleblower Aid, which is working with Zatko, confirmed the authenticity of a redacted copy of the complaint posted online by the Washington Post.

Among Zatko's most serious accusations is that Twitter violated the terms of a 2011 FTC settlement by falsely claiming that it had strong security measures in place to protect the security and privacy of its users. Zatko also accuses the company of deceptions involving its handling of “spam" or fake accounts, an allegation that is at the core of Musk's attempt to back out of the Twitter takeover.

Shares of Twitter Inc. slid 5.4% Tuesday. Zatko didn't immediately respond to a request for comment Tuesday. But he told the Post he “felt ethically bound” to come forward.

Better known by his hacker handle “Mudge,” Zatko is a highly respected cybersecurity expert who first gained prominence in the 1990s and later worked in senior positions at the Pentagon’s Defense Advanced Research Agency and Google.

He joined Twitter at the urging of then-CEO Jack Dorsey in late 2020, the same year the company suffered an embarrassing security breach involving hackers who broke into the Twitter accounts of world leaders, celebrities and tech moguls, including Musk, in an attempt to scam their followers out of bitcoin.

Twitter said in a prepared statement Tuesday that Zatko was fired for “ineffective leadership and poor performance” and said the “allegations and opportunistic timing appear designed to capture attention and inflict harm on Twitter, its customers and its shareholders.” The company called his complaint “a false narrative” that is “riddled with inconsistencies and inaccuracies and lacks important context.”

Zatko's attorneys, Debra Katz and Alexis Ronickher, said Twitter's claim about his poor performance is false and that he repeatedly raised concerns about “grossly inadequate information security systems” with top executives and Twitter's board of directors. The lawyers said that in late 2021, after the board was given “whitewashed” information about those security problems, Zatko escalated his concerns, “clashed” with CEO Parag Agrawal and board member Omid Kordestani and was fired two weeks later.

The 84-page complaint describes a broken corporate culture at Twitter that lacked effective leadership and where Zatko said top executives practiced “deliberate ignorance” of pressing problems. His description of Dorsey’s leadership style is particularly scathing, saying the Twitter founder was “extremely disengaged” during the last months of his tenure as CEO to the point where he would not even speak during meetings on complex issues facing the company.

Zatko said he heard from colleagues that Dorsey would remain silent for “days or weeks.” Dorsey announced he was stepping down as Twitter CEO in November 2021.

The disclosure says Twitter offered no monetary incentives for improving security and platform integrity, although the company did offer $10 million bonuses last year for top executives who could generate short-term user growth.

Among Zatko’s damning accusations of cybersecurity malpractice: Software and security updates were disabled on more than a third of employees’ computers -- unduly exposing them to malware -- and it was common for people to install “whatever software they wanted on their work systems.” Such lapses are typically considered cardinal sins in cybersecurity.

Whistleblower Aid said it is legally precluded from sharing Zatko's statement. The same group worked with former Facebook employee Frances Haugen, who testified to Congress last year after leaking internal documents and accusing the social media giant of choosing profit over safety.

A spokesperson for the US Senate's intelligence committee, Rachel Cohen, said the committee has received Zatko's complaint and "is in the process of setting up a meeting to discuss the allegations in further detail. We take this matter seriously.”

Sen. Dick Durbin, an Illinois Democrat, said in a prepared statement that if the claims are accurate, “they may show dangerous data privacy and security risks for Twitter users around the world.”

Among the most alarming complaints is Zatko’s allegation that Twitter knowingly allowed the Indian government to place its agents on the company payroll where they had “direct unsupervised access to the company’s systems and user data.”

A 2011 FTC complaint noted that Twitter’s systems were full of highly sensitive data that could allow a hostile government to find precise location data for specific users and target them for violence or arrest.

Zatko also describes “deliberate ignorance” by Twitter executives on counting the millions of accounts that are automated “spam bots" or otherwise have no value to advertisers because there is no person behind them.

Alex Spiro, an attorney representing Musk in his effort to back out of his Twitter acquisition deal, said lawyers have issued a subpoena for Zatko. “We found his exit and that of other key employees curious in light of what we have been finding,” Spiro wrote in an email Tuesday. Spiro said Zatko and Musk have not been in contact at any time this year.



Nvidia Overtakes Apple as World’s Most Valuable Company

 A man walks past the Nvidia logo at the company's AI Summit in Mumbai, India, October 24, 2024. (Reuters)
A man walks past the Nvidia logo at the company's AI Summit in Mumbai, India, October 24, 2024. (Reuters)
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Nvidia Overtakes Apple as World’s Most Valuable Company

 A man walks past the Nvidia logo at the company's AI Summit in Mumbai, India, October 24, 2024. (Reuters)
A man walks past the Nvidia logo at the company's AI Summit in Mumbai, India, October 24, 2024. (Reuters)

Nvidia dethroned Apple as the world's most valuable company on Friday, following a record-setting rally in the stock powered by an insatiable demand for its new supercomputing AI chips.

Nvidia's stock market value briefly touched $3.53 trillion, while that of Apple was $3.52 trillion, according to data from LSEG.

In June, Nvidia briefly became the world's most valuable company, before it was overtaken by Microsoft and Apple. The tech trio's market capitalizations have been neck-and-neck for several months. Microsoft's market value stood at $3.20 trillion.

Nvidia's stock has risen about 18% so far in October, with a string of gains coming after OpenAI, the company behind ChatGPT, announced a funding round of $6.6 billion. Nvidia provides chips used to train so-called foundation models such as OpenAI's GPT-4.

"More companies are now embracing artificial intelligence in their everyday tasks and demand remains strong for Nvidia chips," said Russ Mould, investment director at AJ Bell.

"It is certainly in a sweet spot and so long as we avoid a big economic downturn in the United States, there is a feeling that companies will continue to invest heavily in AI capabilities, creating a healthy tailwind for Nvidia."

Nvidia's shares hit a record high on Tuesday, building on a rally from last week when TSMC, the world's largest contract chipmaker, posted a forecast-beating 54% jump in quarterly profit driven by soaring demand for chips used in AI.

The next big test will be when Nvidia reports third-quarter results in November. Nvidia in August forecast third-quarter revenue of $32.5 billion, plus or minus 2%, compared with the current average analyst expectation of $32.90 billion, according to data compiled by LSEG.

Morgan Stanley analyst Joseph Moore said in a note dated Oct. 10 that he remains "very bullish" about the company longer term, but the recent rally "raises the bar for earnings somewhat".

After a meeting with Nvidia's CEO Jensen Huang, Moore noted the ramp up in production of its next-generation Blackwell chips appeared to be "quite strong" and are booked out for 12 months. The stock came under pressure in August after Nvidia confirmed reports that the production of Blackwell chips was delayed until the fourth quarter.

Shares of Nvidia, Apple and Microsoft have an outsized influence on the richly valued technology sector as well as the broader US stock market, with the trio accounting for about a fifth of the S&P 500 index's weightage.

Frenzy around the prospects of AI, expectations that the US Federal Reserve will considerably bring down interest rates, and most recently, an upbeat start to the earnings season, have pushed the benchmark S&P 500 to an all-time high last week.

Nvidia's massive gains have helped boost the stock's appeal for option traders and the company's options are among the most traded on any given day in recent months, according to data from options analytics provider Trade Alert.

The stock has surged nearly 190% so far this year as a boom in generative AI prompted the company to issue a series of blowout forecasts.

"The question is whether the revenue stream will last for a long time and will be driven by the emotion of investors rather than by any ability to prove or disprove the thesis that AI is overdone," said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

"I think Nvidia knows that near term, their numbers are likely to be quite remarkable."