Twitter Whistleblower Opens New Can Of Worms: A Chinese Spy On Company's Payroll?

The testimony of Peiter Zatko, a Twitter Inc TWTR whistleblower, before the Senate on Tuesday highlighted fears of the presence of a Chinese agent on the payrolls of the platform.

What Happened: Zatko revealed that in the week leading up to his firing from the Jack Dorsey-founded platform, he came to know that the U.S. Federal Bureau of Investigation had told Twitter about an agent of China's Ministry of State Security, or MSS, being on the payroll of the company, reported Reuters.

The whistleblower reportedly said there was a “big internal conundrum” at Twitter as some teams wanted to tap Chinese advertisers and others were worried about doing business with the country amid rising geopolitical strife.

A Twitter spokesperson said the company’s hiring process is free from foreign influence and access to data is managed by a combination of background checks and measures like monitoring and detection systems, as per the report.

See Also: How To Buy Twitter (TWTR) Shares

Why It Matters: Zatko, Twitter’s former head of security, recalled before the Senate that a colleague at the company had reportedly said, "Well, since we already have one [agent], what does it matter if we have more?"

He had earlier alleged the Indian government had placed an agent on Twitter's payroll, which was denied by the company's India unit.

Zatko, a well-known hacker and programmer, said Twitter employees were worried the Chinese government would be able to collect user data, according to the report.

Wedbush analyst Dan Ives said these allegations will pose a public relations nightmare for Twitter and investors will demand to know more.

The whistleblower’s testimony also assumes significance amid the current legal tussle between Elon Musk and Twitter over his $44 billion buyout deal, which the Tesla Inc TSLA CEO recently terminated.

But Zatko's testimony and the lack of evidence to support his claims about Twitter's insufficient controls for spam bots will not exactly help Musk, according to experts quoted by Reuters.

Price Action: Twitter shares dropped 1.9% in the after-hours trading to $40.89 after closing 0.7% higher at $41.70 in the regular session, according to data from Benzinga Pro.

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