The FTC has referred a complaint about MyAI chatbot to the DOJ, causing Snap shares to drop.

• On Thursday, Snap's stock price dropped by 5% following the Federal Trade Commission's announcement that it would submit a complaint against the company to the Department of Justice.
• The FTC's non-public complaint accuses Snapchat's My AI chatbot of posing risks and harms to young users, according to the commission's statement.
• The FTC commissioner, Andrew Ferguson, who was chosen by President-elect Donald Trump to be the next FTC chair, wrote a dissenting statement to the complaint.

On Thursday, the Federal Trade Commission announced that it would refer a complaint against the company to the Department of Justice, resulting in a 5% decline in shares.

The FTC's non-public complaint accuses Snapchat's My AI chatbot of posing risks and harms to young users, based on findings from compliance reviews following a 2014 settlement over allegations of public deception regarding data collection by the company.

The FTC has discovered that Snap may be in violation of the law during its compliance reviews.

The FTC stated that a proceeding is in the public interest.

The FTC did not specify the details of its complaint against the My AI chatbot, but the chatbot has faced criticism before.

The FTC's claims were refuted by a Snap spokesperson in a statement to CNBC.

"On the final day of this Administration, the FTC voted to reject a proposed complaint that does not take into account any of the efforts, contains inaccuracies, and lacks solid evidence. Additionally, the complaint does not identify any tangible harm and raises First Amendment concerns."

Snap believes that the FTC's focus on generative AI development is important, but the complaint against the company would hinder innovation and competition in the growing sector of the economy.

In 2023, Snap unveiled its My AI chatbot, which utilizes the large language models of OpenAI and Google to provide users with answers to their questions and suggestions similar to ChatGPT and other AI-powered chat tools.

The chatbot has been criticized for providing problematic responses, including answering a reporter's question about how to hide the smell of alcohol and marijuana. At the time of its initial release, Snap warned that My AI, like other AI-powered chatbots, is prone to hallucinations and can be easily manipulated.

In October 2013, the UK's Information Commissioner's Office issued a preliminary enforcement notice against Snap, accusing the company of failing to properly evaluate the data protection risks associated with its My AI-powered risk assessment tool, particularly as it pertained to children.

Despite the FTC's claim that it voted in a closed meeting to release a public statement regarding its case against Snap and the subsequent referral to the DOJ, it acknowledged that commissioners Melissa Holyoak and Andrew Ferguson were absent.

The FTC highlighted a dissenting statement from Ferguson, who was appointed by President-elect Trump to succeed Lina Khan as the new FTC chair in December.

Ferguson stated that these types of referrals are not made public until a lawsuit is filed in court by the Department or the Commission.

He wrote that he did not attend the absurd closed meeting where this issue was approved.

Ferguson stated that he disagrees with the FTC's allegations against Snap but cannot provide a detailed analysis due to the confidentiality of the case. He also argued that the FTC's interpretation of the law is incorrect and contradicts the First Amendment's guarantees.

If the DOJ files a complaint, Ferguson stated that he will release a more detailed statement about this violation of the Constitution and the rule of law.

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