Siding against Meta Platforms, a federal judge has refused to dismiss a securities-fraud lawsuit alleging the company made misleading statements about its content-moderation policies, as well as the impact of Instagram on teens' mental health.
The ruling -- issued Monday by U.S. District Court Judge Aracelia Martínez-Olguín -- stems from a lawsuit brought in October 2021 by Ohio Attorney General Dave Yost on behalf of the Ohio Public Employees Retirement System, which invested in Meta.
The complaint largely drew on information provided by former Facebook employee Frances Haugen, who provided government officials and reporters with a trove of company documents, including research into the potential harmful effects of Instagram on teen girls.
“This matter arises from an egregious breach of public trust by Facebook, which knowingly exploited its most vulnerable users -- including children throughout the world -- in order to drive corporate profits,” Yost said in the complaint.
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He added that documents provided by Haugen show that Facebook knew its products and systems were “riddled with flaws that sow dissension, facilitate illegal activity and violent extremism, and cause significant harm to users.”
The complaint included numerous specific and allegedly misleading statements made by Meta executives, including CEO Mark Zuckerberg.
Meta urged Martínez-Olguín to dismiss the lawsuit, arguing that the statements referred to in the complaint were too general to support a conclusion that the company engaged in securities fraud.
Martínez-Olguín largely disagreed with Meta. While she said that some of the company's statements cited in the complaint were vague and general, others “suggest specific actions that Meta took and rules that it implemented or enforced.”
For instance, one representation that she said warranted further proceedings was Meta's statement -- first made in 2018 and reiterated in 2021 -- that it removes content that violates the company's standards.