Twitter Inc. (TWTR) recently sued the U.S. Department of Justice (DOJ) and the Federal Bureau of Investigation (FBI) for imposing restrictions on the public release of the full version of a report on government surveillance requests.
The suit has been filed in U.S. district court in North California. Twitter’s suit demands that the governmental restrictions imposed on it be declared unconstitutional under the clauses of the 1st Amendment. The company claims that since these restrictions breach the freedom of speech, they should be nullified.
In Jan 2014, FBI had met Twitter’s management to review a draft of what the company had planned to reveal. Eventually, Twitter was denied permission to publish the report by FBI on grounds of the report’s content being “classified.” The aforementioned suit came up following this development.
Meanwhile, the U.S. Government has recently reached an agreement with companies like Microsoft Corp. (MSFT), Google (GOOGL), Facebook (FB), LinkedIn (LNKD) and Yahoo (YHOO). Earlier these companies had sued the Washington-based Foreign Intelligence Surveillance Court, contending that the 1st Amendment gave them the right to disclose more information about their reluctant role in government spying.
The agreement will enable the tech companies to disclose in bands of 1,000, the number of accounts that the government has targeted for surveillance. Twitter, however, refrained from becoming a part of this agreement.
The highly controversial issue of government surveillance sprung up after Edward Snowden's disclosures that the National Security Agency (NSA) routinely snoops on the electronic communication of American citizens. This revelation led to a public relations crisis whereby people started losing trust in social sites like Facebook and LinkedIn. This phenomenon, in turn, led these companies to sue the government.
We believe that the fact that Twitter’s prioritization of the satisfaction and trust of its users above other things gives it an edge over other social networking sites.
Moreover, Twitter’s ability to generate advertising revenues despite significant competition from Facebook, Weibo, Yahoo and market bellwether Google will be a key growth driver going forward. However, higher operating costs are expected to hurt the company’s profitability in the near term.
Currently, Twitter has a Zacks Rank #3 (Hold).
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