Did the FTC threaten an independent auditor to deliver a negative report on Twitter’s compliance with a 2022 settlement? A new court filing makes that claim and asks a judge to allow X Corporation to exit the consent order to which previous ownership agreed. It also became a topic in yesterday’s House Judiciary Committee hearing, when Jim Jordan confronted FTC commissioner Lina Khan over the allegation.

“Why are you harassing Twitter?” Jordan asked, noting that the FTC has sent a blizzard of demand letters relating specifically to Elon Musk. Jordan starts with Khan’s efforts to uncover communications between Twitter and journalists, but rapidly turned to testimony from Ernst & Young that alleged intimidation and interference in a supposedly independent review:

This is not the first time that we’ve heard about a potential FTC vendetta against Musk over the Twitter Files. The exposure of internal communications revealed a massive censorship regime within federal agencies that suppressed and punished dissent and conservative views on social media platforms, and that exposure came almost entirely through Musk. Back in March, the demand letters got leaked to the Wall Street Journal and forced the FTC to retreat temporarily from its attempts to police journalism:

The Federal Trade Commission has demanded Twitter Inc. turn over internal communications related to owner Elon Musk, as well as detailed information about layoffs—citing concerns that staff reductions could compromise the company’s ability to protect users, documents viewed by the Wall Street Journal show.

In 12 letters sent to Twitter and its lawyers since Mr. Musk’s Oct. 27 takeover, the FTC also asked the company to “identify all journalists” granted access to company records and to provide information about the launch of the revamped Twitter Blue subscription service, the documents show.

However, the accusation that Khan and the FTC had strongarmed the independent assessor of compliance with the 2022 consent order is new. The Wall Street Journal also picked up on the exchange late yesterday:

Jordan pointed on Thursday to new disclosures in Twitter’s court filing, which cited testimony by a third-party auditor hired to review Twitter’s practices under the FTC settlement. According to the filing, an employee from Ernst & Young, the auditor, said he felt “as if the FTC was trying to influence the outcome of the engagement before it had started.”

“This wasn’t harassment, it was a shakedown,” Jordan said.

“Our focus is on protecting people’s privacy and security,” Khan responded at the hearing. “Twitter has sensitive data on 150 million Americans, including private messages…we are doing everything to make sure Twitter is complying.”

Not according to Ernst & Young auditor David Roque. The FTC itself deposed Roque about the conduct of the assessment, and Roque testified that the FTC had attempted to unduly influence its outcome, according to the complaint from X Corporation:

X Corp. recently learned that the FTC’s harassment campaign was even more extreme and far-reaching than it had imagined. On June 21, 2023, the FTC deposed David Roque, the engagement partner for EY’s independent assessment of Twitter’s Program. Ex. 14. Mr. Roque’s testimony and the documents introduced at his deposition raised serious concerns about the way the FTC has conducted its investigation. For example, Mr. Roque testified that the FTC’s conduct made him “fe[el] as if the FTC was trying to influence the outcome of the engagement before it had started.” Id. at 120:20–22. He testified:

[EY’s] obligation under our contract is to go in and do the independent assessor report and then report the facts based on the results. In some of the discussions that we were having with the FTC, expectations were being conveyed about what those results should be before we had even begun any procedures, and I was concerned that there was this adversarial situation occurring where you had two competing parties that, stepping back, both had a desire for a certain outcome to occur that may not have always been aligned.

Id. at 122:4-14. “[T]he way the conversations with the FTC were transpiring” was so startling and unusual that Mr. Roque worried that the FTC posed “an adverse threat [to EY],” meaning that the FTC constituted “somebody outside of the arrangement [EY] had with Twitter trying to influence the outcome of [EY’s] results.” Id. at 120:23–121:2.

When the FTC attorney deposing Mr. Roque asked him to confirm that “no one from the FTC directed you to reach a particular conclusion about Twitter’s program,” he explained that, to the contrary, “[t]here w[ere] suggestions of what they would expect the outcome to be.” Id. at 122:20–24. Mr. Roque testified that the “outcome” he perceived the FTC expected was that EY “would conclude that there were deficiencies in Twitter’s privacy and information security program.”

That expectation came in the form of a thinly veiled threat. A very thinly veiled threat, Roque testified:

The FTC also told Mr. Roque that the “FTC would be surprised if there [were] areas on our report that didn’t have findings based on information the FTC was already aware of,” and that if EY “didn’t have findings in those areas” then it “should expect the FTC would follow up very significantly to understand why we didn’t have similar conclusions.”

Nice business ya got there, in other words. Shame if something happened to it, eh?

What happens next? Presumably the court will ask everyone to testify as to Roque’s claims before making a decision about the consent order. However, Khan and the FTC are building a pretty good case for malicious prosecution and retaliation over the Twitter Files revelations, as Jordan argued in the hearing today. The FTC has no brief to police journalism, although to be fair they seem to be getting the idea that they do from the FBI, CDC, NIAID, Homeland Security, and so on. This sequence reeks of the nice business you got there strategy.

And maybe Musk can take comfort in another observation from today’s hearings, this one from Rep. Kevin Kiley:

Her appearance comes just two days after a judge ruled against the FTC’s effort to stop Microsoft’s proposed purchase of videogame developer Activision Blizzard, providing more grist for Republicans who claim Khan is pursuing specious cases. The FTC is appealing the ruling.

“I have to ask: Why are you losing so much?” said Rep. Kevin Kiley (R., Calif.).

Let’s hope the losing streak continues.