Meta Platforms won the dismissal of a lawsuit claiming it defrauded shareholders by concealing how changes to Apple’s privacy settings would make Facebook and Instagram less desirable for advertisers.
TakeAway Points:
- A lawsuit alleging Meta Platforms misled shareholders by hiding how altering Apple’s privacy settings will make Facebook and Instagram less appealing to advertisers was dismissed.
- Shareholders led by four Israeli insurers and pension funds challenged 17 allegedly false and misleading statements that Meta made in 2021 and 2022.
- Rep. Tim Walberg (R-Mich.) slammed Meta for its response to a bipartisan group of lawmakers regarding illicit drug ads on Facebook and Instagram.
- Meta “not only ignores most of the questions posed in our letter but also refuses to acknowledge that these illicit drug ads were approved and monetized by Meta,” Walberg said in a statement.
Lawsuit against Meta platforms
In a decision on Tuesday, U.S. District Judge Yvonne Gonzalez Rogers also rejected claims that Meta concealed former Chief Operating Officer Sheryl Sandberg’s use of company resources on personal matters, including her wedding and her best-selling book “Lean In.”
The Oakland, California-based judge also turned aside claims that Meta knew its transition to Reels, which copied TikTok’s short-form video format, would hurt revenue because it offered fewer ads per hour than older formats.
Shareholders led by four Israeli insurers and pension funds challenged 17 allegedly false and misleading statements that Meta made in 2021 and 2022.
They said Meta‘s stock price fell 53% in less than a year as the truth came out, wiping out well over $500 billion of the Menlo Park, California-based company’s market value.
But in her 34-page decision, Rogers said Meta’s eventual admission that Apple’s iOS privacy changes could pose a $10 billion “headwind” in 2022 did not demonstrate that its earlier disclosures were false.
She also said the claims about Sandberg came “entirely from press reports” and were unproven, and found no proof that the transition to Reels hurt Meta’s financial performance.
“The court determines plaintiffs have not plausibly alleged violations of federal securities law,” Rogers wrote.
She dismissed the lawsuit with prejudice, meaning it cannot be brought again.
Other defendants included Sandberg, Chief Executive Mark Zuckerberg, Chief Financial Officer Susan Li and her predecessor David Wehner.
The case, which has a different named plaintiff, is Plumbers and Steamfitters Local 60 Pension Trust v. Meta Platforms Inc. et al., U.S. District Court, Northern District of California, No. 22-01470.
Meta response concerning illicit drugs AD on Facebook and Instagram
A Republican congressman slammed Meta on Thursday over what the lawmaker called an inadequate response to concerns about illicit drug advertisements on Facebook and Instagram.
Michigan Rep. Tim Walberg characterized a letter sent by Meta to a bipartisan group of lawmakers on Monday as “unacceptable,” claiming the company failed to address the specific questions the politicians sent to CEO Mark Zuckerberg in August.
The questions to Meta centered around recent reports from The Wall Street Journal and the nonprofit Tech Transparency Project (TTP) that revealed a proliferation of Facebook and Instagram ads steering users to third-party services where they could buy prescription pills and recreational drugs like cocaine. The lawmakers intended the list of 15 questions to help determine the prevalence of illicit drug ads on Meta’s apps, the amount of views and interactions the ads received, how many minors engaged with them and the actions Meta has taken against the responsible groups.
“Meta’s response not only ignores most of the questions posed in our letter, but also refuses to acknowledge that these illicit drug ads were approved and monetized by Meta and allowed to run on their platforms,” Walberg said in a statement. “This is unacceptable. Meta must answer for its negligence and the resulting impact on users, especially children and teens.”
Effect of the opioid epidemic
In its letter to lawmakers, Meta Vice President of Global Legal Strategy Rachel Lieber said that the company shares lawmakers’ concerns “about the public safety and health threat caused by the opioid epidemic.”
“We know this problem impacts many Americans, often with tragic results, which is why fighting drug trafficking online is bigger than any single platform,” Lieber said in the letter, which was obtained by CNBC. “At Meta, we remain committed to playing an important role in the solution.”
Lieber explained in the letter that Meta’s policies “prohibit buying and selling illicit drugs across our apps” and that the company has various measures and resources that it uses “to detect and remove drug-related content that violates our policies.”
Meta “has repeatedly skirted direct questions from members of Congress, the media, and the public about the hundreds of ads for illicit drugs on its platform,” TTP Director Katie Paul said in a statement.
“Meta tries to deflect blame and push a ‘whole of society’ approach,” Paul said.
Meta is “profiting from proving paid amplification to drug trafficking sites that would not have the reach without Meta’s advertising platforms.”
Walberg’s comments come after Zuckerberg, during a live podcast recording in San Francisco, said Meta should push back harder “when people make allegations about the impact of the tech industry or our company” that are not founded in any fact.
“One of the things that I look back on and regret is I think we accepted other people’s view of some of the things that they were asserting that we were doing wrong or were responsible for that I don’t actually think we were,” Zuckerberg said at the event on Tuesday.
