DOJ, FTC Issue Guidance Regarding Preservation of Employees’ Chat Messages for Merger Investigations, Subpoenas and CIDs

At a Glance

• With the increased use of collaborative communication tools in the modern workplace, businesses must be cognizant of their obligations to preserve chat messages in government investigations and enforcement actions.
• The Department of Justice and the Federal Trade Commission have released new guidance to this effect.

On January 26, 2024, the Department of Justice (DOJ) and Federal Trade Commission (FTC) announced updated guidance relating to parties’ obligations to preserve communications generated on ephemeral messaging platforms, such as Microsoft Teams and Slack, that automatically erase communications (typically after a short period of time). In particular, the agencies have updated the language included in their “standard preservation letters and specifications for all second requests, voluntary access letters and compulsory legal process, including grand jury subpoenas” as a response to the increased use of these and other collaboration tools to conduct business. DOJ Deputy Assistant Attorney General Manish Kumar explained that the recent updates are a step towards ensuring that clients and counsel can no longer “feign ignorance” about the significance of these platforms and their role in the modern workplace.

Failure to Preserve Responsive Communications is Sanctionable

The FTC also released a Model Second Request for merger investigations which clarifies that a “Messaging Application” may include “email, chats, instant messages, text messages, and other methods of group and individual communication.” While the DOJ has not yet released a similar preview of the language it intends to use in its own second request, it is apparent that both enforcers are focused on ensuring that relevant communications from across myriad messaging and collaborative platforms are preserved for potential merger investigations and challenges. Notably, a party’s failure to produce required information to the federal antitrust enforcers in a merger investigation may result in significant penalties under the Hart-Scott-Rodino (HSR) Act up to $51,744 per day that the violation continues.

The update comes on the heels of U.S. District Court Judge James Donato’s decision to grant Epic Games, Inc.’s request for an adverse inference sanction against Google for failing to preserve Google Chat messages relevant to Epic’s monopolization case against it.¹ Despite Google claiming it had “taken appropriate steps” to fulfill its preservation obligations, Judge Donato found that Google “did nothing in the way of auditing or monitoring Chat preservation” and noted that Google "tried to downplay the problem and displayed a dismissive attitude ill-tuned to the gravity of its conduct.” Underscoring this point, a similar sanctions motion was filed by the DOJ’s Antitrust Division in its enforcement action against Google last year in which the DOJ argued that Google’s practice of auto-deleting messages between employees “depriv[ed] [the government] of a rich source of candid discussions between Google’s executives, including likely trial witnesses.”

What This Means for Your Business

The DOJ and FTC’s new guidance, while targeted towards ephemeral messaging platforms, does not actually expand on existing preservation obligations. Prior versions of the agencies’ document requests covered materials produced using these applications, and prior enforcement actions resulting in civil sanctions have been brought for failure to preserve or deliberate deletion of the messages. What these updates do indicate is a renewed focus on companies’ efforts to comply with their preservation obligations in the face of pending or ongoing investigations, litigations or enforcement actions. Henry Liu, director of the FTC’s Bureau of Competition, emphasized civic responsibility, stating that “[c]ompanies and individuals have a legal responsibility to preserve documents when involved in government investigations or litigation in order to promote efficient and effective enforcement that protects the American public.”

Companies that have integrated these platforms into their businesses should take the opportunity to review their own internal policies relating to chat and message retention. Businesses should discuss the use of these platforms with outside counsel to ensure executives and relevant employees are knowledgeable about their preservation obligations and update internal legal hold documents as appropriate to clarify their applicability to ephemeral messaging platforms.

In addition, companies utilizing ephemeral messaging platforms should take the time to educate their employees about how these platforms should be used, emphasizing that instant messages and chats are discoverable and potentially subject to preservation obligations.  Ephemeral messaging platforms should not be viewed as less formal or less consequential than other forms of business communication, but rather, the messages exchanged on these platforms can be used against individuals and their employers in the same ways that emails, hard copy documents, text messages, and the other “documents” and “communications” are frequently leveraged against companies in investigations and litigations. Therefore, employees must always be cautious not to say things on their employers’ messaging platforms that they would not be comfortable being seen in court.

Nevertheless, while there are legal risks associated with allowing employees to use ephemeral messaging platforms, those risks may be manageable when weighed against potential business benefits. In deciding whether the use of messaging platforms is right for an individual business, some key considerations include:

• The privacy benefits of ephemeral messages
• The need for informal communication methods
• The decentralized nature of the devices on which the platform may be accessed, including whether your company employs a Bring Your Own Device policy
• The magnitude of control the company can exercise over platform settings

The antitrust laws are nuanced and complex and their application to specific circumstances requires a fact-intensive analysis. Questions regarding a business’s preservation obligations and the legal significance of allowing employees to use ephemeral messaging platforms should be directed to counsel.