Facebook Chairman and CEO Mark Zuckerberg testifies at a House Financial Services Committee hearing in Washington, October 23, 2019.
Erin Scott | Reuters
Meta, formerly known as Facebook, faces new charges from investors for allegedly violating federal securities laws by presenting inaccurate statements about the harm its products can cause.
The lawsuit from Ohio Attorney General Dave Yost alleges Facebook misled the public on the negative effects its apps can have on kids’ wellbeing. Yost filed the case as a federal class action suit on behalf of an Ohio public pension fund and other Facebook investors.
The case follows disclosures from former Facebook employee Frances Haugen, who handed over a trove of documents containing internal research to journalists, Congress and the Securities and Exchange Commission. The documents showed Facebook had conducted research assessing the mental health impact of its Instagram app on adolescents and found the photo-sharing service worsened body issues for one in three teenage girls.
Facebook countered by pointing to the positive impact its services can have on users and claimed some of the results from the study on mental health were misinterpreted. But many lawmakers and parents said Facebook should have done more to minimize harm and improve the experience for users.
A spokesperson for Meta called the suit “without merit” in a statement and said, “we will defend ourselves vigorously.”
The lawsuit alleges CEO Mark Zuckerberg and other company officials knowingly made false statements about the safety and security of its services. It says the declining value of Facebook’s stock since the documents were first released caused the Ohio Public Employees Retirement System (OPERS) and other investors to lose more than $100 billion.
Yost is seeking to recover the lost value and require Facebook to change its practices to ensure it doesn’t mislead the public in the future.
The complaint says Facebook made inaccurate statements to the public and on its website to back up its claims. For example, it points to comments from Zuckerberg on the company’s first-quarter earnings call, where he allegedly “downplayed” concerns about how Facebook’s algorithm might amplify more controversial content. Zuckerberg said on the call that the company’s practices were “quite robust” and said “we go out of our way to try to reduce” extremist content.
Yost has been involved in previous actions against Facebook, including a multi-state antitrust lawsuit. Though a judge threw out the states’ complaint earlier this year, the plaintiffs have indicated they plan to appeal the ruling. The Federal Trade Commission is pursuing a similar case against the company.
Yost also joined 43 other attorneys general in calling for Facebook to halt plans to introduce a version of Instagram for kids. The company ultimately said it would pause its plans.