FTC's Snapchat Chatbot Concerns: A Cautionary Tale for Investors

The Federal Trade Commission (FTC) has raised alarm bells regarding Snap Inc.'s AI-powered chatbot, My AI, alleging that it poses risks and harms to young users. This development serves as a cautionary tale for investors, highlighting the potential pitfalls of social media platforms and AI-powered chatbots. As the FTC's referral to the Department of Justice (DOJ) signals, child safety concerns surrounding AI chatbots are a growing area of focus for regulators.

Snapchat's My AI chatbot, launched in February 2023, leverages large-language models from the likes of OpenAI's ChatGPT and Google's Gemini to provide users with personalized conversations, recommendations, and answers. However, the FTC's investigation into Snap's compliance with a 2014 privacy settlement uncovered evidence that the company may be violating or about to violate the law with its chatbot feature.

While the details of the complaint remain non-public, the FTC's announcement suggests that the agency has identified specific risks and harms that My AI poses to young users. These could include inappropriate content or responses, privacy concerns, addiction and excessive use, misinformation and false information, and exposure to harmful influences. Snap's response to the complaint, as stated by a spokesperson, addresses these concerns by emphasizing the company's rigorous safety and privacy processes, transparency, and the lack of identified tangible harm.



The regulatory implications of this referral are significant for other social media platforms and AI-powered chatbots. The FTC's focus on child safety concerns signals that regulators are paying close attention to the potential risks and harms posed by AI chatbots, particularly those targeted at young users. Other platforms with AI-powered chatbot features, such as Facebook's BlenderBot or Twitter's AI-powered features, may face increased scrutiny and potential regulatory action if they are found to pose similar risks.

Investors should be mindful of the potential risks and challenges associated with social media platforms and AI-powered chatbots. As the FTC's referral to the DOJ demonstrates, regulators are actively monitoring these technologies and may impose new regulations or guidelines to address child safety concerns. Platforms that fail to comply with these regulations or adequately address potential risks and harms may face legal and reputational consequences, which could impact their financial performance and shareholder value.

In conclusion, the FTC's referral of the complaint against Snap Inc. serves as a cautionary tale for investors, highlighting the potential pitfalls of social media platforms and AI-powered chatbots. As regulators increasingly focus on child safety concerns, investors should be aware of the risks and challenges associated with these technologies and monitor the developments in this case closely. By doing so, investors can make more informed decisions about their investments and better navigate the evolving landscape of social media and AI.