Mark Zuckerberg (photo via Paul Marotta/Getty Images).
The attorney general of Ohio has sued the company formerly known as Facebook. The suit alleges that the company knew its practices were harmful to children but kept information from the public and investors in order to drive profits.
Attorney General Dave Yost filed the class-action lawsuit Monday on behalf of the Ohio Public Employees Retirement System (OPERS). The AG says that Facebook allowed investors and the public to believe that Facebook was taking steps to protect users but that internal tracking data showed otherwise. The alleged sleight of hand caused investors (including OPERS) to lose more than $100 billion, Yost claims.
“This matter arises from an egregious breach of public trust by Facebook, which knowingly exploited its most vulnerable users—including children throughout the world—in order to drive corporate profits,” the complaint says. “At the same time, Defendants repeatedly misrepresented to investors and the public that use of Facebook’s products does not harm children, that the Company takes aggressive and effective measures to stop the spread of harmful content, and that Facebook applies its standards of behavior equally to all users.”
The complaint links a drop in the value of Facebook’s stock price to revelations from the so-called “Facebook Papers,” a trove of internal documents shared by former Facebook project manager Frances Haugen.
Those documents revealed that Facebook did track its impact on vulnerable groups and ignored internal warnings from employees.
In other words, according to the complaint, Facebook knew its platforms were used to “facilitate dissention, illegal activity, and violent extremism, and cause significant harm to users, especially children, but Facebook refused to correct these issues.”
Those material misrepresentations, the complaint says, cost investors billions of dollars in losses once information from Haugen came to light.
Over the course of around a month, “Facebook’s stock price declined by $54.08 per share, or 14.3%, from $378.69 per share to $324.61 per share, damaging investors,” the complaint says.
“Facebook said it was looking out for our children and weeding out online trolls, but in reality was creating misery and divisiveness for profit,” Yost said in a press release announcing the lawsuit on Tuesday. “We are not people to Mark Zuckerberg, we are the product and we are being used against each other out of greed.”
The complaint names Facebook founder Zuckerberg, chief financial officer David Wehner, and communications head Nick Clegg as “individual defendants,” alleging that they each played a key role in approving and disseminating false information.
“The Individual Defendants, because of their positions with Facebook, possessed the power and authority to control the contents of the Company’s reports to the SEC, press releases, and presentations to securities analysts, money and portfolio managers, and institutional investors,” the complaint says, adding that each defendant could have either prevented the dissemination of false information, or corrected it.
“Because of their positions and access to material non-public information available to them, each of the Individual Defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and/or misleading,” the complaint says.
The lawsuit seeks to recover the lost stock value. It also demands that Facebook “make significant reforms to ensure it does not mislead the public about its internal practices,” the press release says.
“This suit is without merit and we will defend ourselves vigorously,” a Meta spokesperson told Law&Crime.
The full complaint is below.
[Image courtesy Paul Marotta/Getty Images]
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