Snapchat is a photo messaging system that consumers download as an application to their smart phone or device to send messages through photographs, videos, or text that the original sender can edit and determine the length of time the message can be viewed to recipients. ((Snapchat, https://www.snapchat.com/ (last visited Nov. 9, 2014).)) The application is marketed to consumers to ensure that once the allotted time for each message has elapsed the message disappears, rendering it essentially inaccessible to both the sender and the recipient. ((Id.))
Originally created by four students at Stanford University, Snapchat became public in September, 2011. ((Snapchat, Wikipedia, http://en.wikipedia.org/wiki/Snapchat (last visited Nov. 8, 2014). In its early stages, Snapchat reportedly attracted and used nearly $70 million in venture capital funding. ((Barbara Ortutay, Snapchat CEO Evan Spiegel chats about sexting and the future of his social app, Associated Press, http://www.mercurynews.com/business/ci_24434969/snapchat-ceo-evan-spiegel-chats-about-sexting-and (last visited, Nov. 8, 2014).)) Three years later, Snapchat’s net worth is valued in the United States at $10 billion. ((Snapchat, Wikipedia, http://en.wikipedia.org/wiki/Snapchat (last visited Nov. 8, 2014). In May 2014, Snapchat reported that its users sent nearly 700 million messages a day and recipients viewed nearly 500 million messages. ((Id.))
Snapchat’s success is not a mystery or a surprise to some members of the social media industry. The Wall Street Journal reported in November 2013 that social media heavy hitter Facebook attempted to purchase Snapchat for $3 billion. ((Douglas MacMillan and Evelyn M. Rusli, Snapchat Spurned $3 Billion Acquisition Offer from Facebook, Wall St. J. (Nov. 13, 2013, 1:43 PM) http://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-billion-acquisition-offer-from-facebook/.)) Rumors also suggest that Google tried to swoop in and buy Snapchat for $4 billion shortly after Facebook’s earlier attempt. ((Aaron Souppouris, Google Reportedly Tried to Outbid Facebook for Snapchat with $4 Billion Offer, The Verge (Nov. 15, 2013, 2:41 AM) http://www.theverge.com/2013/11/15/5106950/google-snapchat-4-billion-buyout-rumor.)) Once again, Snapchat refused to sell, believing that the applications net worth would increase steadily in 2014. Id.
Leadership at Snapchat had good reason to hold on to the company thus far. Yet, this messaging system faces some roadblocks. Part of Snapchat’s allure is the fact that the messages sent are temporary. ((Ortutay, supra note 4.)) As a result, Snapchat often faces rumors that it is simply a medium used for sexual-based texting, or “sexting,” especially among teenagers. ((See id.))
Snapchat first addressed early concerns about being associated as the “sexting” application on a thirteen-year-old’s smart phone through marketing tactics. ((See id.)) However, in January 2014, a security breach allowed a hacker to access forty-six million usernames and phone numbers due to the application’s weak security measures, causing greater attention to the issue. ((Nicole Perlroth and Jenna Wortham, Snapchat Breach Exposes Weak Security, N.Y. Times (Jan. 2, 2014, 7:12 PM), http://bits.blogs.nytimes.com/2014/01/02/snapchat-breach-exposes-weak-security/?_r=1. ))
In May 2014 the Federal Trade Commission (FTC) filed a complaint alleging that the Snapchat messages do not disappear as the company led users to believe. ((Andrea Peterson, Snapchat Agrees to Settle FTC Charges that it Deceived Users, Washington Post (May 8, 2014), http://www.washingtonpost.com/blogs/the-switch/wp/2014/05/08/snapchat-agrees-to-settle-ftc-charges-that-it-deceived-users/.)) This suit is part of a much larger series of litigation that the FTC has waged against social media giants including Facebook, Inc. and Google in attempt to fight for consumer protection. ((Id.))
The FTC’s complaint included several allegations suggesting that Snapchat deceived its users by failing to explain various ways in which messages sent could be saved through data collection and security practices, including the all too simple task of taking a screen shot on one’s smart device or phone while a message is being played. ((Federal Trade Commission, Complaint, http://www.ftc.gov/system/files/documents/cases/140508snapchatcmpt.pdf (last visited Nov. 8, 2014).)) Moreover, the FTC suggested that Snapchat collected certain data including geolocation information and access to address books from users with their consent or knowledge. ((Id.)) Lastly, the FTC also argued that Snapchat failed to properly secure its “Find Friends” feature, which caused a security breach that caused a hacker to obtain nearly 4.6 million Snapchat usernames and phone numbers. ((Id.))
On May 8, 2014 Snapchat entered a settlement agreement under the promise that it would adopt a more transparent policy in alerting users of potential ways in which their messages can be saved, as well as an agreement to adopt more careful security measures going forward. ((Id.)) Snapchat also agreed to succumb to additional monitoring to ensure long-term compliance with the terms of the settlement agreement. ((Id.)) Although financial penalties were not sought, Snapchat could be charged future penalties if it fails to comply with the provisions it agreed to in the settlement agreement.
Regardless of these actions, rumors that online hackers breached Snapchat’s security system arose once again in October, 2014. ((Sarah McBride and Alexei Oreskovic, Snapchat Breach Exposes Flawed Premise, Security Challenge, Reuters (Oct. 14, 2014, 7:41 PM), http://www.reuters.com/article/2014/10/14/us-snapchat-future-security-idUSKCN0I32UJ20141014.)) While Snapchat clarified that hackers did not breach their system, the company revealed that an unknown third party somehow created a file of nearly 100,000 photos used as Snapchat messages that the third party threatened to publicize. ((Id.)) Not only does this most recent event call to question whether the basic premise of Snapchat can actually ever be securely sound, it also places the company in risky territory for future valuations. Although Snapchat provides a creative outlet for its users as well as a means for communication, it appears that its future relationship with the FTC as well as financial stability may be in jeopardy until it adopts stronger security measures.