Facebook enjoys rare court win over privacy breach, investor claims

A lawsuit brought forward by investors has been dismissed -- but can be refiled.
Written by Charlie Osborne, Contributing Writer on

The courts have swung in Facebook's favor, dismissing a privacy breach-related lawsuit brought forward by investors. 

The social media giant and chief executive Mark Zuckerberg enjoyed the rare win on Thursday, securing dismissal of a case that accused them of deceiving investors on the impact a data breach would have on stock price, as reported by Reuters

US District Judge Edward Davila prevented the class-action lawsuit from going any further, being of the mind that investors "had failed to allege" that Facebook's board knowingly made false statements that "led to investor losses," according to the news agency.

While the investors said that statements were made that downplayed the scandal and the potential impact on their shares, Davila said the claimants failed to hone in on specific examples of false information being offered -- and some of the examples mentioned were nothing more than optimistic statements, which is not enough to trigger a valid lawsuit. 

Investors, however, do have the option to refile should they wish. 

The court case, which also targeted Facebook COO Sheryl Sandberg and CFO David Wehner, revolves around the Cambridge Analytica scandal. 

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First made public in 2015, Facebook came under fire for permitting Cambridge Analytica to obtain information belonging to roughly 87 million users in the US, UK, and other countries. 

A personality quiz application gathered user data -- as well as that of their contacts -- and this information was passed on to the company for voter profiling and for use in targeted, political propaganda ahead of the 2016 US elections. 

Facebook said it knew nothing of the scandal before journalist reports. However, the attorney general for Washington DC has launched a case against the company, alleging that Facebook was made aware of the brewing scandal months ahead of public disclosure

The aftermath and the constant stream of Cambridge Analytica reports published -- as well as those that alleged the firm was still permitting third-parties to access user data -- caused the social media platform's stock price to tank by close to 20 percent in March 2018. 

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A further share price drop of eight percent occurred following the release of Facebook's Q2 2018 earnings in July, in which the tech giant missed revenue estimates and admitted to slowing user growth. 

Separately, Facebook lost an appeal in August to have a lawsuit dismissed which alleges the company allowed facial recognition technology to invade the privacy of users based in Illinois. Claimants say that the network's tag suggestion feature infringes privacy rights secured under the Illinois' Biometric Information Privacy Act (BIPA). 

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In related security news, Facebook recently announced the suspension of tens of thousands of apps created by roughly 400 developers. While some of the apps were banned for inappropriate data sharing and suspicious behavior, the tech giant emphasized that not all were necessarily a threat -- and some creators simply didn't respond to requests for information, leading to their suspension. 

The move is in line with Facebook's efforts to secure its platform in the wake of Cambridge Analytica. 

ZDNet has reached out to Facebook and will update if we hear back. 

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