Twitter whistleblower reveals employees concerned China agent could collect user data

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By Sheila Dang and David Shepardson

(Reuters) -Disclosures from a former Twitter Inc (NYSE:TWTR) executive turned whistleblower show that Twitter was informed of at least one Chinese agent working at the social media company, U.S. Senator Chuck Grassley said in his opening remarks during a Senate hearing on Tuesday featuring testimony from the whistleblower.

Peiter "Mudge" Zatko, a famed hacker who served as Twitter's head of security until his firing last year, said during the hearing that some Twitter employees were concerned that the Chinese government would be able to collect data on the company's users.

He referenced a Reuters story on Tuesday that detailed internal clashes between some teams that wanted to maximize the advertising revenue opportunity from Chinese advertisers and others who were concerned about doing business inside China amid rising geopolitical tensions.

"This was a big internal conundrum," Zatko said, adding the company was reluctant to turn away from China as the fastest- growing overseas market for ad revenue.

"In a nutshell, if we were already in bed, it would be problematic if we lost that revenue stream," he said.

The whistleblower disclosures had noted that the U.S. Federal Bureau of Investigation had informed Twitter of at least one Chinese agent inside the company, Grassley said in his opening statement.

Zatko said on Tuesday that in the week before he was fired from Twitter, he learned an agent of China's Ministry of State Security, or MSS, an agency comparable to the U.S. Central Intelligence Agency, was on the payroll at Twitter.

It was not immediately clear if the alleged Chinese agent was still working at the company.

Twitter did not immediately respond to a request for comment on Zatko's testimony.

In his testimony, Zatko said he recalled a conversation with another Twitter executive about concerns that a foreign agent was inside the company. The executive responded "Well, since we already have one, what does it matter if we have more?"

LITIGATION AGAINST MUSK

Grassley noted that Twitter Chief Executive Parag Agrawal refused to appear at the hearing for fear it could jeopardize the company's litigation against Elon Musk, who is also the CEO of Tesla (NASDAQ:TSLA) Inc. Twitter and Musk head to trial next month over whether the $44 billion takeover deal should be completed.

Later on Tuesday, Twitter will also announce the results of a shareholder vote on Musk's takeover of the company. A majority of shareholders have already approved the deal, sources told Reuters.

The San Francisco-based company sued Musk for terminating the agreement, while the Tesla chief executive countersued, accusing Twitter of misrepresenting the number of false and spam accounts on its service.

A Delaware judge ruled last week that Musk may include Zatko's whistleblower claims in his case against Twitter, but denied his request to delay the trial.

The Senate Judiciary Committee is questioning Zatko over his claims that Twitter misled regulators about its compliance with a 2011 settlement with the Federal Trade Commission over improper handling of user data.

Since then, Twitter has made "little meaningful progress on basic security, integrity and privacy systems," Zatko's complaint filed with regulators in July said.

Twitter has said Zatko was fired for "ineffective leadership and poor performance," and that his allegations appeared designed to harm Twitter.

Zatko's whistleblower complaint appeared to contain over two pages of links to supporting documents, such as emails between Zatko and CEO Agrawal and an assessment of misinformation and disinformation on Twitter. The number of documents was limited compared with those provided by Facebook (NASDAQ:META) whistleblower Frances Haugen, who released thousands of pages of internal material.