Ohio Attorney General Dave Yost is suing Facebook, now rebranded as Meta, for misleading investors and the public. The lawsuit, which has been filed on behalf of the Ohio Public Employees Retirement System (OPERS) and other investors stems from the social media network’s decision to hide information on how children exposed to Facebook and related platforms like Instagram were negatively affected.
The class-action lawsuit is being brought on behalf of all individuals and entities who purchased Facebook Class A common stock between April 29 and Oct. 21 this year.
In October, former Facebook employee Frances Haugen delivered a series of internal Facebook documents to Congress and the Securities Exchange Commission (SEC). These documents revealed that the company research team found evidence of negative mental health impact among adolescents using Instagram, an app owned and operated by Meta.
Among teenage girls, the use of Instagram worsened body image issues. Many users admitted feeling shameful about their bodies and becoming more insecure and depressed.
“Throughout the Class Period, the Company repeatedly assured investors that it has ‘the most robust set of content policies out there’ and touted the aggressive steps it takes to ensure the safety and security of its users by preventing misinformation and harmful content from spreading through its platforms.
“Facebook also stated that it was committed to keeping people safe and assured investors that it enforces its content policies evenly across all users. These and similar statements made throughout the Class Period were false,” the lawsuit states.
Facebook “misrepresented” to investors that it does not harm children. The lawsuit also went on to allege that Facebook also knew that its user metrics were “unreliable and artificially inflated,” and that fake profiles made up a big portion of the platform’s users. Such misrepresentations resulted in Facebook common stock being traded at “artificially inflated prices” during the class action period.
Between Sept. 13 and Oct. 21, when The Wall Street Journal published articles exposing Facebook’s internal documents showing harmful effects on youngsters, the company’s stock declined by $54.08 per share or roughly 14 percent of its value. In terms of Facebook’s total market capitalization, the decline represented a loss of $150 billion.
OPERS bought $47.6 million worth of Facebook shares in July. After the WSJ expose, the pension fund had to sell $4.3 million worth of shares at a loss. The lawsuit seeks to recover the lost shareholder value and wants Facebook to change its practices to ensure that the company will no longer lie about its internal practices.
“Facebook said it was looking out for our children and weeding out online trolls, but in reality was creating misery and divisiveness for profit… We are not people to Mark Zuckerberg, we are the product and we are being used against each other out of greed,” Yost said in a statement.
Yost’s office noted that Facebook has itself admitted in one of its internal documents that “we are not actually doing what we say we do publicly.” A Facebook spokesperson has called the lawsuit “without merit” and stated that the company will defend itself “vigorously.” The lawsuit was filed in a federal court in California.
Back in May, Yost was one of the 44 attorneys general that sent a joint letter to Facebook CEO Mark Zuckerberg, asking that the company cease its plans to develop an Instagram version for kids under the age of 13.
The letter had warned that an Instagram platform targeting young children was “harmful for myriad reasons.” The attorneys general raised concerns that kids on such a platform might be subjected to increased cyberbullying and become targets of predators.