The lawsuit alleges that Facebook–now known as Meta–violates securities statutes by allegedly misleading investors about the negative mental health effects of its product.
Ohio Attorney General Dave Yost has filed a lawsuit against Meta—formerly known as Facebook—for allegedly violating federal securities statutes by misleading investors about the harm its products can cause.
According to CNBC, Yost specifically claimed that Facebook applications have a quantifiably negative effect on children’s health and well-being.
The lawsuit, adds CNBC, has been filed as a prospective class action on behalf of an Ohio pension fund, as well as other Facebook investors.
Yost’s lawsuit follows disclosures made by former Facebook employee Frances Haugen, who provided Congress, various media outlets, and privacy activists a “treasure trove” of documents. Most of these documents, notes CNBC, relate to Facebook’s own internal research programs.
Overall, they suggest that Facebook had already conducted research about the mental health impacts of Instagram—among Meta’s subsidiaries—on adolescents.
Facebook’s data scientists, says CNBC, found that Instagram worsened body-image issues for one out of every three teenage users.
“Defendants were aware that Facebook’s platforms facilitate dissension, illegal activity, and violent extremism, and cause significant harm to users, especially children, but Facebook refused to correct these issues,” the lawsuit alleges. “All told, these disclosures erased more than $100 billion in shareholder value and subjected Facebook to immense reputational harm.”
After Facebook published its reports, the company’s stock value dropped drastically, causing it and its investors to lose more than $100 billion.
The Ohio Public Employees Retirement System, notes The Verge, manages assets worth about $125 billion on behalf of an estimated 1.1 million active members, retirees, and other beneficiaries.
Before the report’s released, the OPERS had “purchased shares of Facebook Class A common stock at artificially inflated prices” in 2021, and then “suffered damages as a result of the violations of the federal securities laws alleged.”
“Facebook said it was looking out for our children and weeding out online trolls, but in reality was creating misery and divisiveness for profit,” Yost said in a statement. “We are not people to Mark Zuckerberg, we are the product and we are being used against each other out of greed.”
Nevertheless, Facebook attorneys have said that the lawsuit is “without merit” and have pledged to “vigorously defend” the company.
Yost, adds The Verge, is seeking to recover the $100 billion OPERS and other investors say they lost from Facebook’s supposed deceit; the attorney general also “demands that Facebook make significant reforms to ensure it does not mislead the public about its internal practices” again.