Meta Platforms Inc. is bracing for a multibillion-dollar legal battle after the U.S. Supreme Court dismissed the company’s appeal concerning the infamous Cambridge Analytica data scandal. The decision opens the door for the case to proceed in district court, potentially resulting in a costly settlement for the tech giant.
What Happened?
The Supreme Court’s dismissal, announced on November 23, 2024, provided no detailed reasoning, stating only that the case was “dismissed as improvidently granted”. This decision follows oral arguments heard earlier this month and significantly raises the stakes for Meta, as analysts estimate the settlement could reach $2 billion.
In response, Meta expressed its disappointment and reiterated its stance that the lawsuit’s claims are baseless. “We will continue to defend ourselves as this case is considered by the district court,” the company said in a statement.
The Roots of the Scandal
The case stems from the 2018 Cambridge Analytica scandal, where personal data from over 30 million Facebook users was allegedly misused for political purposes without their consent. The revelations sparked global outrage, regulatory scrutiny, and lawsuits alleging that Meta misled shareholders about the associated risks.
According to shareholder claims, the company’s mishandling of the breach and subsequent fallout caused two significant stock price drops in 2018, erasing over $200 billion in market value.
Why It Matters
The Supreme Court’s decision is just the latest in a series of legal challenges Meta has faced in recent months:
- Mental Health
Lawsuits:
In October 2024, a U.S. District Judge rejected Meta’s attempts to dismiss lawsuits filed by several U.S. states. These lawsuits accuse the company of contributing to the mental health crisis among teenagers by making its platforms addictive. - Shareholder
Lawsuits in Tech:
Meta joins a growing list of tech companies facing shareholder lawsuits. Recent examples include: - Alibaba Group agreed to a $433.5 million settlement in a class-action lawsuit over investor claims.
- Tilray Brands Inc. faced allegations of misleading shareholders regarding voting practices.
- Broader
Industry Implications:
The dismissal underscores the increasing legal scrutiny faced by tech giants. Nvidia Corporation, for instance, is under Supreme Court review for allegations of misleading investors about crypto-mining revenue before a market crash.
Financial and Market Impact
Following the Supreme Court’s decision, Meta’s stock fell 0.7% on Friday, closing at $559.14. After-hours trading saw a slight recovery, with shares ticking up 0.098% to $559.69, according to Benzinga Pro.
Analysts warn that prolonged litigation or a costly settlement could impact Meta’s financial performance, especially as the company invests heavily in metaverse development and artificial intelligence.
What’s Next for Meta?
Meta’s legal troubles are far from over. The company faces intensifying scrutiny from shareholders, regulators, and advocacy groups over its business practices. As the case proceeds to the district court, the potential for a landmark ruling or settlement looms large.
This lawsuit not only highlights the lingering consequences of the Cambridge Analytica scandal but also serves as a cautionary tale for tech companies navigating the intersection of data privacy, transparency, and shareholder accountability.
For now, Meta must prepare to defend itself against mounting legal and financial challenges as it seeks to weather yet another storm in its tumultuous journey.
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