Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 1 of 24
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`
`BERNSTEIN LITOWITZ BERGER
` & GROSSMANN LLP
`JONATHAN D. USLANER (Bar No. 256898)
`(jonathanu@blbglaw.com)
`2121 Avenue of the Stars, Suite 2575
`Los Angeles, CA 90067
`Tel:
`(310) 819-3470
`
`-and-
`
`HANNAH ROSS
`(hannah@blbglaw.com)
`AVI JOSEFSON
`(avi@blbglaw.com)
`SCOTT R. FOGLIETTA
`(scott.foglietta@blbglaw.com)
`1251 Avenue of the Americas
`New York, NY 10020
`Tel:
`(212) 554-1400
`Fax:
`(212) 554-1444
`
`Counsel for Plaintiff Ohio Public Employees
`Retirement System
`
`[Additional counsel appear on signature page]
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`OHIO PUBLIC EMPLOYEES RETIREMENT
`SYSTEM, on behalf of itself and all others
`similarly situated,
`Plaintiff,
`
`v.
`META PLATFORMS, INC. f/k/a FACEBOOK,
`INC., MARK ZUCKERBERG, DAVID M.
`WEHNER, and NICK CLEGG,
`Defendants.
`
` Case No. 3:21-cv-08812
`
`COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
`
`CLASS ACTION
`
`DEMAND FOR JURY TRIAL
`
`
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`CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
`CASE NO. 3:21-cv-08812
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`Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 2 of 24
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`Plaintiff Ohio Public Employees Retirement System (“Plaintiff”), by and through its
`counsel, alleges the following upon information and belief, except as to those allegations
`concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff’s information and
`belief are based upon, inter alia, counsel’s investigation, which included review and analysis of:
`(i) regulatory filings made by Meta Platforms, Inc. f/k/a Facebook, Inc. (“Facebook” or the
`“Company”) with the United States Securities and Exchange Commission (“SEC”); (ii) press
`releases, presentations, and media reports issued by and disseminated by the Company; (iii) analyst
`and media reports concerning Facebook; and (iv) other public information regarding the Company,
`including testimony provided by a Facebook whistleblower during an October 5, 2021 hearing
`before the United States Senate Sub-Committee on Consumer Protection, Product Safety, and Data
`Security.
`I.
`INTRODUCTION
`1.
`This securities class action is brought on behalf of all persons or entities that
`purchased or otherwise acquired shares of Facebook Class A common stock between April 29,
`2021 and October 21, 2021, inclusive (the “Class Period”). The claims asserted herein are alleged
`against Facebook and certain of the Company’s senior executives (collectively, “Defendants”),
`and arise under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange
`Act”) and Rule 10b-5, promulgated thereunder.
`2.
`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. At the same time, Defendants repeatedly misrepresented to investors
`and the public that use of Facebook’s products does not harm children, that the Company takes
`aggressive and effective measures to stop the spread of harmful content, and that Facebook applies
`its standards of behavior equally to all users. Facebook investors recently learned the truth when
`former Facebook employee turned whistleblower, Frances Haugen, came forward with internal
`documents showing that Defendants were aware that Facebook’s platforms facilitate dissention,
`illegal activity, and violent extremism, and cause significant harm to users, especially children, but
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`Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 3 of 24
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`Facebook refused to correct these issues. All told, these disclosures erased more than $100 billion
`in shareholder value and subjected Facebook to immense reputational harm.
`3.
`Facebook operates the world’s largest family of social networks, enabling more
`than three billion users worldwide to connect and share content through mobile devices, personal
`computers, and virtual reality headsets. The Company’s products include its flagship social
`networking platform, Facebook, which allows people around the world to connect, share, discover,
`and communicate with each other on personal computers and mobile devices. Facebook’s other
`products include: Instagram, a community for sharing photos, videos, and private messages;
`Facebook Messenger, a messaging application for people to connect with friends, family, groups,
`and businesses across platforms and devices; and WhatsApp, a messaging application used by
`people and businesses to communicate. The Company generated the vast majority of its $86 billion
`in revenue in 2020 by selling advertisement placements to marketers which Facebook then pushes
`to its users across its platforms.
`4.
`Throughout the Class Period, the Company repeatedly assured investors that it has
`“the most robust set of content policies out there” and touted the aggressive steps it takes to ensure
`the safety and security of its users by preventing misinformation and harmful content from
`spreading through its platforms. Facebook also stated that it was committed to keeping people
`safe and assured investors that it enforces its content policies evenly across all users. These and
`similar statements made throughout the Class Period were false.
`5.
`Thousands of recently leaked internal Facebook documents paint a remarkably
`different picture. Those documents show that Defendants were acutely aware that the products
`and systems central to Facebook’s business are riddled with flaws that sow dissention, facilitate
`illegal activity and violent extremism, and cause significant harm to users, but Facebook lacks the
`will or ability to correct them. Despite this knowledge, Facebook opted to maximize its profits at
`the expense of the safety of its users and the broader public, exposing Facebook to serious
`reputational, legal, and financial harm. Moreover, Facebook has taken significant steps to attract
`pre-teens to its products, which the Company viewed as “a valuable but untapped audience,”
`despite knowing that those products have a toxic effect on the well-being of their most vulnerable
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`Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 4 of 24
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`users, particularly teenage girls. Defendants also knew that Facebook’s user metrics were
`unreliable and artificially inflated and that the number of duplicate accounts created by users
`comprised a greater proportion of Facebook’s active users than the Company represented. As a
`result of Defendants’ misrepresentations, shares of Facebook common stock traded at artificially
`inflated prices during the Class Period.
`6.
`The truth began to emerge on September 13, 2021, when The Wall Street Journal
`published the first of a series of articles, referred to as “The Facebook Files.” Those articles, citing
`a trove of internal Company documents obtained from a whistleblower, later revealed as Frances
`Haugen, demonstrated the extent to which Facebook knows its platforms contain flaws that cause
`significant harm to users, but which the Company makes minimal or ineffectual efforts to address.
`Specifically, the September 13 article reported that, despite the Company’s public assurances that
`Facebook applies its standards of behavior equally to all users, the Company has exempted
`millions of high-profile users from some or all of its rules, permitting numerous violations of the
`Company’s Code of Conduct. Internal documents reveal how the Company’s favoritism towards
`such high-profile users is widespread and that Facebook was “not actually doing what we say we
`do publicly.”
`7.
`On each of the next four days, The Wall Street Journal published an additional
`installment of “The Facebook Files,” each of which detailed a distinct problem with Facebook’s
`platforms and extensively cited internal Facebook documents leaked by the whistleblower. On
`September 14, 2021, The Wall Street Journal reported that, despite the Company publicly
`downplaying the harmful effects of Instagram on young users, Facebook’s own research
`demonstrates that Facebook “make[s] body image issues worse for one in three teen girls” many
`of whom “blame Instagram for increases in the rate of anxiety and depression” and have linked
`suicidal thoughts and eating disorders to their experiences on Instagram.
`8.
`The September 15, 2021 installment detailed how Facebook’s 2018 change to its
`algorithm that controls what content a user will see led to the spread of content that is objectionable
`and harmful to users. Internally, Facebook employees described the algorithm change as having
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`Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 5 of 24
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`“unhealthy side effects” on important content, like news and politics, and led to “[m]isinformation,
`toxicity, and violent content” becoming “inordinately prevalent.”
`9.
`On September 16, 2021, The Wall Street Journal revealed that Facebook has weak
`and ineffective responses to the use of its platforms by drug cartels and human traffickers as a
`facilitator of their criminal enterprises and that content violating the Company’s domestic
`servitude policy routinely makes its way on to Facebook’s platforms without detection and
`removal.
`10.
`The September 17, 2021 installment revealed that, even for topics on which
`Facebook committed itself to representing a specific viewpoint, the Company was unable or
`unwilling to manage content on its platforms in line with its own representations.
`11.
`On September 28, 2021, the day after Facebook announced that it had paused its
`development of a version of Instagram specifically targeted at children, The Wall Street Journal
`published an article, citing internal Company documents, that detailed Facebook’s significant
`efforts to monetize use of the Company’s products by pre-teens ages 10 to 12. Those documents
`show that Facebook focused on “tweens” because they represented “a valuable but untapped
`audience.”
`12.
`In the wake of The Wall Street Journal reports, on October 3, 2021, the Facebook
`whistleblower revealed her identity as former Facebook project manager, Frances Haugen, during
`a bombshell televised interview on the CBS News program, 60 Minutes. During the interview,
`Ms. Haugen revealed that Facebook repeatedly “has shown it chooses profit over safety,”
`concluding that “I don’t trust that they’re willing to actually invest what needs to be invested to
`keep Facebook from being dangerous.”
`13.
`The following day, on October 4, 2021, CBS News published an article which
`included the eight whistleblower complaints against Facebook that Ms. Haugen has filed with the
`SEC, alleging that Facebook has repeatedly misled the public and investors on several issues.
`14.
`On October 21, 2021, after the market closed, The Wall Street Journal published
`an article, citing internal Company documents, that raised significant concerns about the accuracy
`and reliability of some of Facebook’s publicly reported user metrics. Those documents show that
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`the use of duplicate accounts by some users is “very prevalent” which could render Facebook’s
`ratio of daily active users inherently “less trustable.”
`15.
`Then, on October 22, 2021, after the end of the Class Period, it was first reported
`by The Washington Post that a second Facebook whistleblower had come forward and filed a
`complaint with the SEC, based on allegations similar to those made by Ms. Haugen.
`16.
`From the date of the first article published by The Wall Street Journal on September
`13, 2021 to The Wall Street Journal article published on October 21, 2021 that raised concerns
`about the accuracy and reliability of the Company’s user metrics, Facebook’s stock price declined
`by $54.08 per share, or over 14%, representing a decline of more than $150 billion in Facebook’s
`total market capitalization.
`II.
`JURISDICTION AND VENUE
`17.
`The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange
`Act (15 U.S.C. §§ 78j(b) and 78t(a)), and Rule 10b-5 promulgated thereunder (17 C.F.R. §
`240.10b-5). This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.
`§§ 1331 and 1337, and Section 27 of the Exchange Act (15 U.S.C. § 78aa).
`18.
`Venue is proper in this District pursuant to Section 27 of the Exchange Act (15
`U.S.C. § 78aa), and 28 U.S.C. § 1391(b). Facebook maintains its headquarters in Menlo Park,
`California, which is situated in this District, conducts substantial business in this District, and many
`of the acts and conduct that constitute the violations of law complained of herein, including
`dissemination to the public of materially false and misleading information, occurred in and/or were
`issued from this District. In connection with the acts alleged in this Complaint, Defendants,
`directly or indirectly, used the means and instrumentalities of interstate commerce, including, but
`not limited to, the mails, interstate telephone communications, and the facilities of the national
`securities markets.
`III.
`PARTIES
`19.
`Plaintiff is a public pension fund organized for the benefit of public employees
`throughout the state of Ohio who are not covered by another state or local retirement system. As
`of December 31, 2020, Plaintiff managed assets of approximately $125 billion on behalf of more
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`than 1.1 million active members, retirees, and beneficiaries. As indicated in the certification
`submitted herewith, Plaintiff purchased shares of Facebook Class A common stock at artificially
`inflated prices during the Class Period and suffered damages as a result of the violations of the
`federal securities laws alleged herein.
`20.
`Defendant Facebook operates the world’s largest family of social networking sites,
`which are accessed by more than 3.5 billion users. Incorporated in Delaware, the Company
`maintains its corporate headquarters at 1601 Willow Road, Menlo Park, California. Facebook
`Class A common stock currently trades on NASDAQ under ticker symbol “FB” but the
`Company’s stock is expected to begin trading under its new ticker symbol, “MVRS,” on December
`1, 2021.1 As of October 20, 2021, Facebook had over 2.3 billion shares of Class A common stock
`outstanding, owned by hundreds or thousands of investors.
`21.
`Defendant Mark Zuckerberg (“Zuckerberg”) is the founder, Chairman and Chief
`Executive Officer of Facebook, which he founded in 2004.
`22.
`Defendant David M. Wehner (“Wehner”) has served as Facebook’s Chief Financial
`Officer since June 2014.
`23.
`Defendant Nick Clegg (“Clegg”) has served as Facebook’s Vice President of
`Global Affairs and Communications since October 2018.
`24.
`Defendants Zuckerberg, Wehner, and Clegg are collectively referred to hereinafter
`as the “Individual Defendants.” The Individual Defendants, because of their positions with
`Facebook, possessed the power and authority to control the contents of the Company’s reports to
`the SEC, press releases, and presentations to securities analysts, money and portfolio managers,
`and institutional investors. Each of the Individual Defendants was provided with copies of the
`Company’s reports, presentations, and press releases alleged herein to be misleading prior to, or
`shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause
`
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`1 On October 28, 2021, Facebook, Inc. changed its corporate name to Meta Platforms, Inc.,
`pursuant to an amended and restated certificate of incorporation filed with the Delaware Secretary
`of State on October 28, 2021. For ease of reference, this complaint continues to refer to the
`Company as Facebook.
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`them to be corrected. Because of their positions and access to material non-public information
`available to them, each of the Individual Defendants knew that the adverse facts specified herein
`had not been disclosed to, and were being concealed from, the public, and that the positive
`representations which were being made were then materially false and/or misleading.
`IV.
`BACKGROUND
`25.
`Based in Menlo Park, California, Facebook operates the world’s largest family of
`social networking sites, allowing its more than three billion users to connect with friends and
`family by sharing status updates, personal photos and videos, and other items of interest. The
`Company’s products include its flagship social network, Facebook, as well as Instagram, a photo
`and video sharing app, and messaging apps, Facebook Messenger and WhatsApp.
`26.
`The Company uses a feature called News Feed, a constantly updated, personally
`customized scroll of photos and links to news stories, to push content to users of Facebook’s
`flagship social network. Facebook also uses a similar feature for Instagram, called Instagram Feed.
`These feeds are the primary mechanisms through which users are exposed to content on the social
`networks and Facebook uses a proprietary algorithm to control what content appears in each user’s
`feed. The Company generates revenue by selling that user attention to advertisers that post ads on
`Facebook and/or Instagram, which accounted for nearly all of Facebook’s $86 billion in revenue
`in 2020.
`V.
`DEFENDANTS’ MATERIALLY FALSE AND MISLEADING
`STATEMENTS CAUSE SUBSTANTIAL LOSSES TO INVESTORS
`
`27.
`The Class Period begins on April 29, 2021, the first trading day after Facebook held
`its first quarter 2021 earnings call. During the call, which began after the market closed on April
`28, 2021, Defendant Zuckerberg stated that “[f]or the last several years, we focused a lot on content
`moderation and privacy work, and I view customer support as the next pillar of the trust and safety
`work for our services.” During the call, an analyst questioned Facebook’s executives about the
`Company’s algorithmic amplification, which could lead to more controversial content being
`pushed to users’ News Feeds. In response, Defendant Zuckerberg downplayed those concerns,
`stating that Facebook had practices in place that are “quite robust” and assured investors that “we
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`don’t want extremist content or any of that stuff on our services, so if anything to the contrary of
`trying to promote that, we go out of our way to try to reduce that.” Defendant Wehner further
`assured investors that “more than anyone else in the industry we invest on the safety and security
`side to sort of keep bad content off the site before it gets ranked and put into what people see.”
`Defendant Wehner also stated that Facebook has “the most robust set of content policies out there”
`and “we really do more than anyone else in the industry on the safety and security front to prevent
`things like misinformation and bad content going into the system in the first place.”
`28.
`On April 29, 2021, Facebook filed with the SEC its quarterly report on Form 10-Q
`for the first quarter of 2021. The Form 10-Q was signed by Defendant Wehner and contained
`certifications by Defendants Zuckerberg and Wehner that attested to the purported accuracy and
`completeness of the Form 10-Q. In the 10-Q, Facebook represented that “[w]e believe the
`percentage of duplicate accounts is meaningfully higher in developing markets such as the
`Philippines and Vietnam, as compared to more developed markets.” In addition, Facebook touted
`its continued investment in certain “company priorities,” including, among other things, “continue
`making progress on the major social issues facing the internet and our company, including privacy,
`safety, and security” and “communicate more transparently about what we’re doing and the role
`our services play in the world.”
`29.
`On May 26, 2021, Facebook held its annual meeting of shareholders. During the
`meeting, in response to a shareholder’s question about the Company’s policies on censorship,
`Defendant Clegg stated that “[w]e always strive to enforce our policies evenly without regard to
`the political affiliation of those affected,” and while Facebook supports free expression, “of course,
`that doesn’t mean that politicians can just say things that clearly cause harm and our policies on
`hate speech, incitement and so on apply to everyone regardless of their position of power.”
`Defendant Clegg further emphasized that “[s]o . . . we’re very clear, we remove content that poses
`specific harm to people, content intended to intimidate, exclude or silence views.” Similarly, in
`response to another shareholder’s question about Facebook’s plan to manage the proliferation of
`“fake news” on its platform, Defendant Clegg stated that “remember, we really are committed to
`fighting wherever we can the spread of false information on Facebook” and “[w]e remove content
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`that violates our Community Standards . . . and we reduce distribution of stories, which are marked
`as false. And we . . . try to inform people, so that they can decide for themselves what to read,
`trust, and share.” During the meeting, Defendant Zuckerberg assured investors that “for the last
`several years, our team that has been focused on kind of trust and safety overall, has been more
`focused on content moderation, so making sure that we can identify harmful content and take it
`down.”
`30.
`On July 29, 2021, Facebook filed with the SEC its quarterly report on Form 10-Q
`for the second quarter of 2021. The Form 10-Q was signed by Defendant Wehner and contained
`certifications by Defendants Zuckerberg and Wehner that attested to the purported accuracy and
`completeness of the Form 10-Q. In the 10-Q, Facebook represented that “[w]e believe the
`percentage of duplicate accounts is meaningfully higher in developing markets such as the
`Philippines and Vietnam, as compared to more developed markets.” In addition, Facebook touted
`its continued investment in certain “company priorities,” including, among other things, “continue
`making progress on the major social issues facing the internet and our company, including privacy,
`safety, and security” and “communicate more transparently about what we’re doing and the role
`our services play in the world.”
`31.
`Throughout the Class Period, Facebook also made numerous false and misleading
`statements in its Code of Conduct regarding the Company’s commitment to user safety. For
`instance, Facebook’s Code of Conduct, which the Company posted to its website during the Class
`Period, stated that “[o]ur reach and influence require that we commit and hold ourselves
`accountable to a high standard, ensuring that we build products and programs that have a positive
`impact, keep people safe and serve everyone.” The Code of Conduct also stated that one of
`Facebook’s five core principles is to “keep people safe and protect privacy” and emphasized that
`“we are committed to protecting our communities from harm.”
`32.
`In its Code of Conduct, Facebook also described its purported mandate to “innovate
`responsibly by making every effort to anticipate and mitigate potential harms in all that we build”
`and emphasized that “Facebook is committed to maximizing the positive impact we have on people
`and society through all that we build.” As part of that mandate, Facebook stated it “[c]onsider[s]
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`a broad range of potential impacts on people, communities and society, looking across different
`dimensions of responsibility, such as inclusion, safety, privacy and others” and that it “[r]aise[s]
`and address[es] potential harms early and often throughout the product development process.”
`Facebook also stated that it “[w]ork[s] quickly to identify and remove harmful content from
`Facebook platforms, such as hate speech, harassment, child exploitation, threats of violence and
`terrorism,” and emphasized that “[s]afety is one of our Responsible Innovation Dimensions.”
`33.
`Throughout the Class Period, Facebook also made public statements on its website
`regarding the Company’s commitment to user safety and the measures that it takes to limit the
`spread of harmful content and misinformation on its platforms. For instance, Facebook’s website
`stated that the Company is “committed to protecting your voice and helping you connect and share
`safely” and “[t]hat’s why we have Community Standards that specify what’s allowed on our apps,
`and we remove anything that breaks these rules.” On its website, Facebook also stated that it
`“remove[s] hate speech, harassment, threats of violence and other content that has the potential to
`silence others or cause harm,” including “proactively detect[ing] 95% of hate speech on Facebook
`that we remove before anyone reports it to us.” Facebook’s website further stated that the
`Company “work[s] to limit the spread of misinformation,” including “[c]ombating COVID-19
`[m]isinformation,” by “taking aggressive steps to stop misinformation and harmful content from
`spreading.”
`34.
`The statements set forth above in ¶¶27-33 were materially false and misleading. In
`truth, Defendants knew that Facebook’s platforms foster division and spread harmful content,
`facilitate illegal activity and violent extremism, and cause significant harm to children, but lacked
`the will or ability to correct those issues. Defendants also knew that certain of the Company’s user
`metrics were unreliable and artificially inflated and that the number of duplicate accounts created
`by a single user accounted for a larger portion of Facebook’s active users.
`VI.
`THE TRUTH EMERGES
`35.
`The truth about Facebook’s misconduct began to emerge on September 13, 2021,
`when The Wall Street Journal published the first of a series of articles, which have become known
`in the media as “The Facebook Files,” citing internal Company documents obtained from a
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`CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
`CASE NO. 3:21-cv-08812
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`Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 12 of 24
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`whistleblower that show that Facebook knows its platforms are riddled with flaws that cause harm
`to users, but lacks the will or ability to correct them. Specifically, on September 13, 2021, The
`Wall Street Journal reported that, contrary to Facebook’s public assurances that the Company
`applies its standards of behavior equally to all users, Facebook has built a system, known as “cross-
`check” or “XCheck,” that has exempted millions of high-profile users from some or all of its rules.
`According to the article, an internal review conducted by Facebook employees in 2019 found the
`Company’s favoritism to such high-profile users to be both widespread and “not publicly
`defensible,” concluding that “[w]e are not actually doing what we say we do publicly” because
`“[u]nlike the rest of our community, these people can violate our standards without any
`consequences.” The article further revealed that Facebook has misled the public and its own
`Oversight Board, a body that Facebook created to purportedly ensure the accountability of the
`Company’s enforcement processes, regarding its XCheck system. Notably, in June 2021,
`Facebook told the Oversight Board that its systems for high-profile users was only used in “a small
`number of decisions.” However, internal documents show that XCheck grew to include at least
`5.8 million users in 2020, but Facebook “review[s] less than 10% of XChecked content.” As a
`result of these disclosures, Facebook’s stock price declined by $2.18 per share, from $378.69 per
`share to $376.51 per share.
`36.
`On September 14, 2021, The Wall Street Journal revealed that, despite Facebook
`publicly downplaying the negative effects of Instagram use among teens, the Company’s own in-
`depth analyses show significant mental-health issues stemming from the use of Instagram among
`teenage girls, many of whom linked suicidal thoughts and eating disorders to their experiences on
`the app. Facebook’s researchers have repeatedly found that Instagram is harmful for a sizable
`percentage of teens that use the platform. In an internal presentation from 2019, Facebook
`researchers concluded that “[w]e make body issues worse for one in three teen girls” and “[t]eens
`blame Instagram for increases in the rate of anxiety and depression.” Similarly, in a March 2020
`presentation posted to Facebook’s internal message board, researchers found that “[t]hirty-two
`percent of teen girls said that when they feel bad about their bodies, Instagram made them feel
`worse.”
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`CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
`CASE NO. 3:21-cv-08812
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`Case 4:21-cv-08812-JST Document 1 Filed 11/12/21 Page 13 of 24
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`37.
`On September 15, 2021, The Wall Street Journal published an article detailing how
`an algorithm change that Facebook introduced in 2018 to control what appears in each user’s News
`Feed promotes content that is objectionable and harmful to some users. In an internal report,
`Facebook data scientists concluded that “[o]ur approach has had unhealthy side effects on
`important slices of public content, such as politics and news,” with one data scientist noting that
`“[t]his is an increasing liability.” In other internal memos, Facebook data scientists concluded that
`because of the new algorithm, “[m]isinformation, toxicity, and violent content are inordinately
`prevalent.” Other documents show that Facebook employees also discussed the Company’s
`motive for changing its algorithm—namely, that users began to interact less with the platform,
`which became a worrisome trend for Facebook’s business. Facebook found that the inflammatory
`content that the new algorithm was feeding to users fueled their return to the platform and led to
`more engagement, which, in turn, helped the Company sell more of the digital ads that generate
`most of its revenue. As a result of these disclosures, Facebook’s stock price declined by $2.61 per
`share, from $376.53 per share to $373.92 per share.
`38.
`On September 16, 2021, The Wall Street Journal revealed that Facebook has weak
`and ineffective responses to drug cartels and human traffickers that use the Company’s platforms
`to facilitate their illegal activities. The article reported that in January 2021, a Facebook
`investigator flagged that a drug cartel was using Facebook to recruit, train, and pay hit men, but
`those pages remained active for months and the Company failed to take swift and effective act