(Photo: REUTERS/Al Drago TPX IMAGES OF THE DAY)
Though Facebook and its chief executive Mark Zuckerberg, together with two more key executives, got an investor lawsuit on deceiving investors on the probable impact of a privacy breach on its stock price dismissed, investors will be given the chance to refile the case.
US District Judge Edward Davila of San Jose, California based his decision on the inability of Facebook investors, who filed the suit, to prove that Facebook made false statements that led to investor losses.
At the time of writing, neither Facebook nor the lawyers of the investors could be reached for a comment.
The lawsuit focuses on the infamous Facebook-Cambridge Analytica data scandal wherein Cambridge Analytica, a British political consulting firm, got 87 million people's personal data through Facebook profiles and used them for political advertising.
Though this harvesting of personal data by Cambridge Analytica got first reported in December 2015, by March 2018, media outlets are still reporting that Facebook was still letting third parties to access users' data.
It had also been reported that data from this breach got used with the current US president's campaign.
This is what caused Facebook's stock price to nosedive by 18 percent within two weeks.
Then, in July 2018, the company's stock price plunged again by nearly 19 percent after Facebook stated in its quarterly earnings report that active users are declining.
Investors are claiming that Facebook executives downplayed the effect of the Cambridge Analytica leak.
It is the failure of the investors to point out the specific instances of this downplaying of the effects of the leak that the judge based his decision of dismissal.
He specified that whatever comments the company executives made regarding the scandal were forward-looking predictions while others were general optimistic expressions.
Such isn't the credible basis for securities fraud lawsuits.
This class action lawsuit targeted Zuckerberg, Facebook COO (Chief Operating Officer) Sheryl Sandberg and CFO David Wehner.
It was initially reported in July of this year that the Federal Trade Commission consented to fine Facebook around $5bn, the biggest ever for a technology company, with regards to privacy violations following the Cambridge Analytica revelations.
It should be noted that the company had agreed seven years ago, under a 2012 decree from another FTC investigation, to better protect user privacy.
According to reports, though Facebook will re-examine the process it handles user data, the settlement would not restrict the company's ability to share with third parties the data of its users.
The Wall Street Journal and the Washington Post, citing anonymous sources, reported that the vote on the fining was 3-2 breaking along party lines.
The investors have until Oct. 26 to file a new version of their complaint with "more particular facts."
The US social media giant is still facing a separate nationwide lawsuit from users under different state and federal laws for the same case of a data breach.
