back to article First, stunning whistleblower leaks. Now a shareholder lawsuit lands on Zuckerberg's desk

Facebook on Wednesday was sued for allegedly violating federal securities laws in the first of what's likely to be many such claims arising from internal documents revealed by former employee and whistleblower Frances Haugen. Less than a day earlier, Facebook reportedly told its employees in an internal email to "preserve …

  1. HildyJ Silver badge
    FAIL

    Polarization - existence vs. enhancement

    Zuck, much as I hate to admit it, is right when he says polarization existed before social media.

    But he is avoiding the fact that he is purposely enhancing it and exploiting it to make money and build his fortune.

    As far as the shareholders, they were complicit in this until they lost money.

    1. ShadowSystems

      Re: Polarization - existence vs. enhancement

      I shall be making an extra large batch of popcorn to munch upon while reading about this ClusterZuck(TM).

      1. Mark 85 Silver badge
        Pint

        Re: Polarization - existence vs. enhancement

        Excellent. Someone else can bring the melted butter.... I bring beer. Now to go find some comfortable easy chairs.

        1. John Brown (no body) Silver badge

          Re: Polarization - existence vs. enhancement

          " Now to go find some comfortable easy chairs."

          I believe that Cardinals have the comfy chairs. Not something you'd expect, but there you go :-)

      2. Anonymous South African Coward Silver badge

        Re: Polarization - existence vs. enhancement

        Excellent.

        Any Saffers round here?

        Maybe we can give them a good braai?

    2. jmch Silver badge

      Re: Polarization - existence vs. enhancement

      "As far as the shareholders, they were complicit in this until they lost money"

      Not everyone is as tech-savvy as the average Register reader. Shareholders are used to rely on official company information divulged in shareholder briefings and to the SEC as being factual and correct, exactly because it is a criminal offence for companies to lie in these statements / filings.

      Either way, good on the shareholders for finding another angle of attack.

      1. Doctor Syntax Silver badge

        Re: Polarization - existence vs. enhancement

        "Either way, good on the shareholders for finding another angle of attack."

        But why are they attacking themselves? It makes sense to attack the executives in person but they, the shareholders, are the company.

        1. jmch Silver badge

          Re: Polarization - existence vs. enhancement

          "But why are they attacking themselves?"

          They're not exactly attacking themselves - while Facebook as a company is a defendent, and one result of the lawsuit could be a further drop in share price, the shareholders are probably foreseeing that a cleaned-up Facebook is a more profitable one (even if it's income decreases, it could be more profitable if not exposed to gigantic fines).

          The other thing is that they name Zuck (CEO) + CFO in their personal capacities. If they personally have to pay damages to FB shareholders it's a win for them.

          1. Zippy´s Sausage Factory
            Unhappy

            Re: Polarization - existence vs. enhancement

            If they are ordered to pay personally, they'll find some way to make Facebook Meta pay it for them, I'm sure.

            (We really need an icon for "resigned shrug at the nature of the world")

      2. Someone Else Silver badge

        Re: Polarization - existence vs. enhancement

        Shareholders are used to rely on official company information divulged in shareholder briefings and to the SEC as being factual and correct, exactly because it is a criminal offence for companies to lie in these statements / filings.

        In other words, shareholders are dumber than soup.

    3. Someone Else Silver badge

      Re: Polarization - existence vs. enhancement

      In short, Zuck traffics in hate. Full stop.

    4. Anonymous Coward
      Anonymous Coward

      Re: Polarization - existence vs. enhancement

      yes, polarization is nothing new, facebook 'just' provided a great tool to facilitate this (btw, I'm not suggesting that was their original intention, but I'm pretty sure they realized it much sooner than others, and figured it works for their profit and to hell with wider implications).

    5. Plest Bronze badge
      Mushroom

      Re: Polarization - existence vs. enhancement

      There's always been jealousy, hatred and people feeling like crap when they compare their lives to others but exactly what you said, he is "exploiting it to make money".

      Social media a boil on the arse of mankind, it's simply there to exploit the needy, the greedy, the narcissitic, sadly it also exploits those who can't see the harm it's doing them, making them feel like it validates their lives when in fact it's slowly eroding the little self worth they have left.

      Zuckerberg and their ilk are just f**king parasites!

  2. Anonymous Coward
    Anonymous Coward

    Side bet time. How long before one of the excuses is "the big boys made me do it"?

    1. Version 1.0 Silver badge

      Initially Facebook monitored all the posts and canceled the ones that they didn't like, but then the Republicans protested that Facebook was just a bunch of left-wingers and were attacking "free-speech". This lead to Facebook abandoning their monitoring of posts and bought us to the current situation but made them a lot more money.

      1. Snake Silver badge

        "Free speech"

        The 'free speech' the Republicans were claimed were being "attacked" were violating the terms of service anyway (read: violent, threatening or otherwise hateful).

        "Left-wing" posts on the same level were also being blocked (why don't you ask adult performers how their bans went, for nothing more than actually being an adult performer but not posting anything racy), but the conservatives were angry that vitriol left-wing posts were vastly outnumbered by their right-wing posts, hence the greater number of take-downs.

  3. croc

    How much would the suit have to claim before Zuck actually cried on the way to the bank? Or, how long would it take to spend a billion bucks....

    1. Mark 85 Silver badge

      Or, how long would it take to spend a billion bucks....

      Depends on how many lawyers he hires.

      I saw an article that he and his wife are also being sued by some hired domestic help. Apparently, Zuck and wife are rather nasty people. Bigoted and cheap by calling names and not paying for hours worked.

      1. iron Silver badge

        Oh what a surprise, they look like such nice well-adjusted people.

        Sorry cant keep a straight face while saying that.

        1. Anonymous Coward
          Anonymous Coward

          "nice well-adjusted people."

          H'mmm. Completely wrong on all three counts.

    2. J__M__M

      how long would it take to spend a billion bucks....

      Give me a week.

    3. CrazyOldCatMan

      how long would it take to spend a billion bucks....

      I dunno. Give me the billion and, in a few years, I'll write you a report[1]..

      [1] Which will mostly consist of "haven't done it yet. Few more years please.."

  4. mbee

    Facebook's whistle blower, the one named in this article would be right at home in Stalin's USSR. She wanted more censorship not less, more guided news, not less, more PC social media, not less. She was all for censorship of everything she did not like. Facebook is not the law, never should be the law and should not be making decisions on what is legal and what is not. If facebook employees discover what they believe is illegal activity than they have the same duty every citizen has, call the cops. The government, state and federal can make that process centralized and easy. If they determine the activity is illegal than they can take action under existing law. Facebook can ban practices but if has to say what those are and let every user know what they are. It is the same process as no shirt, no shoes, no service sign on the restaurant door. Censoring by unnamed, unknown and unanswerable employees is a direct violation of liberty and the constitution.

    1. Zenubi

      Life in Stalin's USSR was awful, terrifying and with driving poverty for most.

      You throw these similes around like the political illiterate you seem to be.

      This brave women is standing up to power. This is not about censorship but the common decency facebook completely lacks.

    2. Pascal Monett Silver badge

      Citation, please ?

      1. Kane Silver badge
    3. Jimmy2Cows Silver badge

      Re: Censoring ... is a direct violation of liberty and the constitution

      Censoring by unnamed, unknown and unanswerable employees is a direct violation of liberty and the constitution

      Assuming you mean the US Constitution, no it isn't, as that only prohibits government censorship, not private enterprise.

      Businesses are legally free to censor as much or as little as they like.

      1. DubyaG

        Re: Censoring ... is a direct violation of liberty and the constitution

        Just goes to show you that most people have not read the constitution, so they miss the "Congress shall make no law..." part. The unfortunate part is that most of our pols carry their little pocket constitutions and say similar things. It's just performative bitching.

    4. Potemkine! Silver badge

      Standing alone against a coercive, powerful, people crushing force is the absolute contrary of Stalin's USSR. Dissenting was not a hobby under Stalin's rule.

      It's a pity History is so less and badly taught that so many know quite nothing about what happened in the past. No surprise things happen again and again.

      1. Cederic Silver badge

        Perhaps then the better analogy is the cultural revolution in China. She's denouncing the people that refuse to socially conform.

        Facebook has many flaws, but 'insufficient censorship' absolutely isn't one of them, no matter how much the US Senate and the UK Parliament want to hear that.

    5. Kane Silver badge
      Stop

      "Censoring by unnamed, unknown and unanswerable employees is a direct violation of liberty and the constitution."

      Nope.

      If you're referring to the First Amendment of the Constitution of the United States, then you're clearly wrong.

      Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

      The key word here is "Congress". The First Amendment is about restrictions placed on the government to prevent the regulation of Free Speech®, not a private corporation like Faecesbook.

      If you're referring to any other Articles or Amendments, I'd love to hear your arguments.

      But then you've made 9 posts since 2013, so I don't expect an immediate response.

      It's okay. I'll wait.

    6. Stoneshop Silver badge
      Headmaster

      Censoring?

      Censoring by unnamed, unknown and unanswerable employees is a direct violation of liberty and the constitution.

      Censoring is when a government blocks you entirely from reporting on matters they would rather not have public, or voicing your opinion. Facebook users will always have other channels to disseminate what gets suppressed. Maybe those channels too are disinclined to spread that info, but private parties have never been required to publish everything they get offered (except when a government forces them to publish particular info they rather wouldn't, but see above).

      Also, whose constitution? The one you seem to invoke has zero pertinence in other countries, however much the US would like that not to be so.

    7. genghis_uk Silver badge

      Ignoring the overblown comparison between some moderation by a social platform and a regime that potentially killed millions...

      Others have already pointed out some of the errors in this post i.e. moderation is not censorship and a private company does not have any first amendment obligations (funny how a lot of people in the UK know more about American constitutional law than those in the US - did no-one listen in Civics 101?)

      I will agree with one thing though - Facebook (and others) do not implement their rules consistently. If they were at least consistent, people would know where they stood. It is good that the FB Papers call out the bias toward VIP posts.

      1. Someone Else Silver badge

        [...] did no-one listen in Civics 101?

        Civics is not taught in US schools anymore, the result of a decades-long campaign to keep that commie-pinko stuff outta our schools, goddammit!

        'Cuz, you know, an ignorant populace is easier to control.*

        *ref. Donald tRump

      2. CrazyOldCatMan

        did no-one listen in Civics 101?

        No - they were probably moaning about how it breaches their "liburtee" to be forced to study..

  5. Juha Meriluoto

    Sounds familiar...

    "But my view is that what we're seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company."

    Sounds like something coming from the leaders of Russia or Belarus... just saying...

    1. Twanky Silver badge
      Windows

      Re: Sounds familiar...

      "But my view is that what we're seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company."

      And nobody ever does that sort of thing on FB. 'Cos that would be anti-social.

    2. Anonymous Coward
      Anonymous Coward

      Re: Sounds familiar...

      what we're seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company.

      It ain't false if they're all facts..

    3. Someone Else Silver badge

      Re: Sounds familiar...

      Sounds like something coming from the leaders of Russia or Belarus...

      ...or the US Republican Party, Co. Inc.

  6. chivo243 Silver badge
    Stop

    Nothing like a rose colored massage

    to put peoples views into your perspective.... There's sucker born every minute. Tweak the data just enough and they will come! And be happy to pay for the opportunity.

  7. Pascal Monett Silver badge
    Facepalm

    "what's been revealed about Facebook's operations [..] has harmed investors"

    When I read those words, I was thinking "Finally, investors are starting to take a step back from this cesspit".

    Then I read the complaint : their only problem is that the stock value has dropped. Not a peep about anything Facebook is on the hook for.

    Right, time to pick up my cynicism again . . . I know I left it around here. Can't be far off.

    1. Chris G Silver badge

      Re: "what's been revealed about Facebook's operations [..] has harmed investors"

      There are few investors who put the ethics of a company before the profits it can make for them, they are all about the money.

      It seems to be more and more prevalent for investors or groups of investors to sue the companies they have bought shares in, if the company is not making enough profit for them or worse, losing them money.

      Still, if this group gets big enough and can win sufficient recompense, they could kill the golden goose, I won't hold my breath though.

      1. Doctor Syntax Silver badge

        Re: "what's been revealed about Facebook's operations [..] has harmed investors"

        "win sufficient recompense"

        From whom? Who is it who owns the company?

        1. Chris G Silver badge

          Re: "what's been revealed about Facebook's operations [..] has harmed investors"

          Shareholders are not considered owners of a company.

          I suspect in this case, those who are losing value in the shares they hold are looking at the $52 billion cash pile FartBarf allegedly holds.

    2. Jimmy2Cows Silver badge

      Re: their only problem is that the stock value has dropped

      Well, their legal action does have to based on something that might actually be illegal.

      A huge proporption of investors don't give a shit about the ethics of their stock growth, or even about being mislead while it grows, but mislead them and the stock falls... they will call in the SEC.

    3. SundogUK Silver badge

      Re: "what's been revealed about Facebook's operations [..] has harmed investors"

      There needs to be financial lost for the law suit to have standing, so the investors have no choice in how they phrase it.

      1. Anonymous Coward
        Anonymous Coward

        Re: "what's been revealed about Facebook's operations [..] has harmed investors"

        "... has harmed investors"

        Just replace with "has blasphemed God", or "has insulted the King", to understand it in a non-US context.

    4. veti Silver badge

      Re: "what's been revealed about Facebook's operations [..] has harmed investors"

      In order to bring any action against Facebook, the plaintiffs have to show that they've been materially harmed by the actions they're complaining about.

      That's why there's so much focus on the stock price. It's by far the easiest way to clear that hurdle - without which the case would be summarily dismissed.

      1. Pascal Monett Silver badge

        Okay, fine.

        But they've only lost if they sell their shares now.

        As long as they keep their shares, they haven't lost anything.

      2. Anonymous Coward
        Anonymous Coward

        Re: "what's been revealed about Facebook's operations [..] has harmed investors"

        Stock prices go up and down for various reasons. Fraud has to be proven - that is the threshold. And if fraud is proven, then stock price is not essential.

        One claimed fraud here is that the number of unique FB users was deliberately misrepresented to shareholders. There are some others.

    5. Anonymous Coward
      Anonymous Coward

      Re: "what's been revealed about Facebook's operations [..] has harmed investors"

      You are right in that Facebook PROFITS have been consistently rising, and I predict that will be a big stumbling block in proving the case.

      Stock prices go up and down for various reasons including the general state of the economy or the state of the particular sector the company is involved in. So stock price alone cannot be a factor.

      Fundamentally, the bad stuff was done specifically because it led to larger profits. The nastiest part, the dopamine promoting algorithm, is perfectly legal and without liability for fraudulent defamation due to section 230. That is the main point in terms of societal damage, and also the main source of profit.

      There is the smaller issue of whether the number of actual unique users was overestimated, and whether that caused advertisers to pay more than they should. That also presumes that advertisers don't have their own indepenent way of measuring ROI on advertising fees. About this point, don't expect more than a symbolic award and a minor change in the language of report number of unique users. I don't expect advertisers to flee - they are there because Facebook really works for them. Proof of that can be seen from the fast FB advertiser response to being cut out of iOS.

      In conclusion, the issue of whether "the algorithm" should benefit from protection section 230 is one that that must be decided by lawmakers.

      1. genghis_uk Silver badge

        Re: "what's been revealed about Facebook's operations [..] has harmed investors"

        What has 230 got to do with FB algorithms?

        Section 230 removes liability for what users post and allows the platform to moderate without having to face expensive litigation. Actually, most 230 cases are really 1st amendment but 230 allows an easy test to throw a case out before it becomes expensive.

        This is all about how FB presents the posts and what rules are applied (or not applied) during moderation - nothing 230 about it

  8. Roger Kynaston Silver badge

    the product is not going to be able to stop facebork

    The way to stop the Zuck and his ilk doing the reprehensible things they do is to persuade the customers not to buy the product. Once the ad revenue dries up they will adapt or go bust.

    So, is advertising solar panels or heat pumps next to climate deniers a good look for those companies?

  9. Alister

    The complaint, brought by shareholder Wee Ann Ngian

    Is she a Nac Mac Feegle?

    1. short a sandwich

      Wee free men

      Crivens!

      1. Kane Silver badge
        Go

        Re: Wee free men

        Hey, pal, can yer mammie sew? Stitch this!

    2. CrazyOldCatMan

      s she a Nac Mac Feegle?

      Dunno. But my senior 2 cats are called Feegle and Kelda..

  10. Anonymous Coward
    Anonymous Coward

    Why can Facebook shareholders just sue themselves and cut out the middleman?

    Can't see how they can get compensation from what they already own without prejudicing other shareholders.

    1. doublelayer Silver badge

      Re: Why can Facebook shareholders just sue themselves and cut out the middleman?

      It's a class action, meaning that if they win, all shareholders can elect to receive a chunk of the settlement. That chunk will be worth less than the postage to deliver the communications about it, but everyone has the option to get it. If I was a shareholder, I wouldn't like it very much, but as someone who doesn't like Facebook, I'm happy if it causes them to lose some money.

  11. Phones Sheridan
    Facepalm

    "preserve internal documents and communications since 2016,"

    Which according to the company handbook, means "Delete everything, delete everything now!"

    1. Red Ted Silver badge
      Facepalm

      ...and then put the hard drives through the shredder.

      It's like the electronic version of the joke from 20 years ago:

      Paper shredders come in four sizes: Small, Medium, Large and Enron.

    2. Anonymous Coward
      Anonymous Coward

      ... and start with the handbook, ffsake!!!!

  12. Anonymous Coward
    Anonymous Coward

    Duplicate accounts ?

    When FB first started I created a mock account to be able to advise bosses on "what's this thing". That was 2005.

    That account still exists, and gets loads of requests from "friends".

    So I never quite believe the ludicrous number of people supposed to be on FB. There's a difference between "accounts" and "account holders" (see also: banks).

    What's always amused me more is how many people seem to have worked with the fake LinkedIn profile I set up in 2006.

    1. Anonymous Coward
      Anonymous Coward

      Re: Duplicate accounts ?

      What's always amused me more is how many people seem to have worked with the fake LinkedIn profile I set up in 2006.

      The most fun I had with that was when I received link requests from people I knew personally, and I am pretty sure they still haven't worked out that my fake person doesn't actually exist even though they work at the same company (pro tip: always choose a large company, also because there will be plenty of internal details available to render your fake more plausible).

      Maybe I'll run thispersondoesnotexist a few times to see if it coughs up a picture good enough for the profile.

      On the Internet, nobody knows you're a dog.

      :)

    2. CrazyOldCatMan

      Re: Duplicate accounts ?

      fake LinkedIn profile

      My firewall SMTP module now drops anything addressed to the unique variant of my email address that I used on LinkedIn straight into the spam trap - the only thing it ever gets is property or drug spam..

  13. Anonymous South African Coward Silver badge

    fartbook

    faccebok

    faecebook

    flartbok

    1. TimMaher Silver badge
      Windows

      Re: flartbok

      Ok Saffer!

      You been talking to Konstabel Els again?

  14. msobkow Silver badge

    "Unfair?"

    Zuk, thou art truly slime from between the toes of a Himalayan sloth...

  15. aregross

    Meta?

    I like Meh

  16. EarthDog

    The Great Old American Whine

    (in a nasal whiney voice) "I'm not responsible".

  17. This post has been deleted by its author

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