Snap shares drop as FTC refers MyAI chatbot complaint to the DOJ
Snap CEO Evan Spiegel, joins CNBC ‘Power Lunch’ on September 17, 2024.
CNBC
Snap shares 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 stems from the FTC’s compliance reviews with Snap following a 2014 settlement regarding allegations of public deception pertaining to data collection 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 proceeding is in the public interest,” the FTC said in its statement.
The FTC did not specify what about the My AI chatbot its complaint was focused on, but the chatbot has previously drawn scrutiny.
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 out a proposed complaint that does not consider any of these efforts, is based on inaccuracies, and lacks concrete evidence,” the Snap spokesperson said. “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 that the “complaint would stifle innovation and competition in a critical and growing sector of the economy.”
Jonathan Raa | AP
Snap debuted the My AI chatbot in 2023. It is powered by the large language models of OpenAI and Google, giving it the ability to answer user questions and provide tips and suggestions similar to ChatGPT and other AI-powered chatting tools.
The chatbot has been noted for providing problematic responses. In one instance while speaking with a reporter who was 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 chatbot’s initial release, Snap said that My AI, like other AI-powered chatbots, is “prone to hallucination and can be tricked into saying just about anything. Please be aware of its many deficiencies and sorry in advance!”
In Oct. 2023, the United Kingdom’s Information Commissioner’s Office issued a preliminary enforcement notice against Snap, alleging that the company’s My AI-related risk assessment “did not adequately assess the data protection risks posed by the generative AI technology, particularly to children.”
Although the FTC said that it voted during a closed meeting to issue a public statement about it’s case against Snap and its ensuing referral to the DOJ, it noted that FTC commissioners Melissa Holyoak and Andrew Ferguson were absent.
The FTC also pointed to a dissenting statement by Ferguson, who President-elect Donald Trump named in December to replace Lina Khan as the next FTC chair.
Ferguson noted that these kinds of referrals “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 at which this matter was approved,” he wrote.
Ferguson added that he opposes the FTC’s complaint against Snap, but that he can’t “release a detailed analysis of its many problems,” because the case is not public. Ferguson wrote that the complaint’s interpretations 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 he will “release a more detailed statement about this affront to the Constitution and the rule of law.”
Watch: Snap CEO on earnings beat and new advertising products
Tesla CEO Elon Musk wears a ‘Trump Was Right About Everything!’ hat, as he, U.S. Trade Representative Jamieson Greer and Central Intelligence Agency Director John Ratcliffe attend a cabinet meeting at the White House, in Washington, D.C., U.S., March 24, 2025.
Carlos Barria | Reuters
Tesla is set to report first-quarter earnings on Tuesday after market close.
Here’s what Wall Street is expecting, based on a survey of analysts by LSEG:
- Earnings per share: 39 cents
- Revenue: $21.11 billion
Tesla is expected to report a slight revenue decline from $21.3 billion in the same quarter a year earlier. However, investors are going to be more focused on what the future holds after concerns about tariffs and CEO Elon Musk’s close ties to the White House pushed the stock price down 44% so far this year as of Monday’s close.
Earlier this month, Tesla reported a 13% decline in deliveries to 336,681. Tesla blamed the lower deliveries, in part, on the need to suspend production temporarily at its factories while it upgraded lines to start manufacturing a refreshed version of its popular Model Y electric SUVs.
Deliveries are the closest approximation of vehicle sales reported by Tesla but are not precisely defined in the company’s shareholder communications.
At an all-hands meeting with employees last month, Musk tried to reassure staffers that they were still in good hands, and to “hang onto your stock.” He pointed to the popularity of the Model Y, and Tesla’s potential in robotics, artificial intelligence and autonomous vehicle technology.
At the meeting, Musk also made light of the backlash against Tesla elicited by his work for President Donald Trump to reduce the size of the federal government, and his endorsements of Germany’s anti-immigrant AfD party, along with other political rhetoric and antics.
“If you read the news it feels like, you know, Armageddon,” Musk said on a livestream of the employees meeting. “It’s like, I can’t walk past the TV without seeing a Tesla on fire.” He followed up saying, “This is psycho, stop being psycho!”
That was before Trump’s announcement earlier this month of widespread tariffs, the one area where Musk has publicly broken with the Trump administration. On X, he called Peter Navarro, Trump’s top trade advisor and tariff proponent, a “moron” and “dumber than a sack of bricks.”
Tesla stands to take a significant hit from the president’s proposed tariffs, assuming they don’t get rolled back. Tesla manufactures cars in the U.S. for domestic sales so it’s not subject to the 25% tariff on imported autos, but the hefty levies on other components and materials could be severe.
Tesla relies on suppliers in Mexico and China for items like automotive glass, printed circuit boards and battery cells, among other parts essential for the production of its cars. The company has sought an exemption from the U.S. trade representative for equipment imported from China that it uses in its factories.
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