Facebook was sued by Ohio’s Attorney General Dave Yost on Tuesday for allegedly deceiving shareholders about the potential harm its social media platform inflicted on young users.
The complaint [PDF] was filed on behalf of the state’s largest pension fund, Ohio Public Employees Retirement System, and all other investors that acquired Facebook shares between April 29 and October 22 this year.
Facebook founder Mark Zuckerberg, CFO David Wehner, and VP of Global Affairs and Communications (and former British Deputy Prime Minister) Nick Clegg were also listed as defendants.
It’s the latest federal securities fraud lawsuit to hit Facebook, also known as Meta for corporate reputation-washing reasons.
Whistleblower and ex-employee Frances Haugen obtained and leaked internal documents that, for one thing, indicated the social media giant optimized its algorithms to keep users hooked on its platform even though doing so was detrimental to the mental health of some netizens.
The data also demonstrated how Facebook’s AI content moderation systems were ineffective at removing misinformation, toxic hate speech, and violent videos. Illicit activities such as drug smuggling and human trafficking also flew under the radar.
The documents led to a string of news articles dubbed The Facebook Papers, an effort led by the Wall Street Journal and other publishers. Haugen presented the evidence to and testified before US lawmakers in Congress and in front of British Members of Parliament. The files are also referenced in the Ohio lawsuit.
"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 claimed in a statement. "We are not people to Mark Zuckerberg, we are the product and we are being used against each other out of greed."
Suddenly, it feels like we're in 2010 again.
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The complaint claims Facebook repeatedly told investors it has “the most robust set of content policies out there” to prevent fake news and harmful content from spreading. But Haugen’s leaked documents revealed Facebook knew its social media empire was “riddled with flaws that sow dissension, facilitate illegal activity and violent extremism, and cause significant harm to users,” the lawsuit alleged.
“Despite this knowledge, Facebook opted to maximize its profits at the expense of the safety of its users and the broader public, exposing Facebook to serious reputational, legal, and financial harm,” according to the complaint. The onslaught of bad press caused the company’s shares to tumble over 14 per cent, wiping more than $150bn in Facebook’s value, the lawsuit continued.
Ohio’s Dave Yost wants to turn the case into a class-action lawsuit on behalf of investors affected by the loss. He reckons Facebook should fork out damages and shareholders should be compensated.
“This suit is without merit and we will defend ourselves vigorously,” a Meta spokesperson told The Register in a statement.
A similar lawsuit was filed by a shareholder in the Eastern District of New York last month. ®