SCOTUS Set To Rule On Facebook’s Future

( – The U.S. Supreme Court (SCOTUS) will rule on a controversial scandal regarding Facebook’s use of user data after approving certiorari for a shareholder case. The plaintiffs in the case allege that Meta Platforms, then Facebook, misled investors regarding a data harvesting scandal. The ruling could impact how companies disclose information to investors in the future.

Facebook’s filing indicates the suit is a class action which stems from improper use of user data, including former UK company Cambridge Analytica. In December 2022, the company paid out $725 million to resolve a lawsuit over the distribution of 87 million users’ personal data to third parties, including Cambridge Analytica. The issue has been public knowledge since 2018.

Cambridge Analytica used the data to target advertising for Donald Trump’s 2016 campaign, among other things. Meta CEO Mark Zuckerberg was called into Congress to testify regarding the affair.

In 2019, Facebook paid $100 million to resolve a Securities and Exchange Commission complaint regarding defrauding investors by concealing the extent and nature of the problem. The company also paid out a $5 billion fine to the Federal Trade Commission to avoid further penalties.

The European Union is also scrutinizing Meta over their child protection regulations, with the suggestion that Facebook and Instagram aren’t in compliance with local laws. The company was fined $1.3 billion in May 2023 for privacy violations in the EU.

The basic accusation against Meta is that they inflated share prices by omitting the extent and details regarding the scandal when they conveyed the situation to investors. Investors have suggested the stock in the company lost over $200 billion in market value after the scandal was publicized in 2018.

The 9th Circuit U.S. Court of Appeals ruled against Facebook/Meta in an October 2023 ruling; Facebook appealed the outcome and asked SCOTUS to dismiss the suit. The Appeals Court wrote that the problem was Facebook’s unwillingness to disclose the exact nature of the scandal, and that they knew more than they informed investors, which is against the law.

Copyright 2024,