Meta Platforms, the parent company of Facebook and Instagram, has successfully dismissed a lawsuit alleging it defrauded shareholders by hiding the impact of Apple's privacy changes on its advertising business. The suit also included claims related to former Chief Operating Officer Sheryl Sandberg's alleged misuse of company resources for personal matters.
On Tuesday, U.S. District Judge Yvonne Gonzalez Rogers ruled in favor of Meta, rejecting claims that the company concealed the adverse effects of Apple’s iOS privacy changes. The privacy adjustments, introduced by Apple, made it harder for advertisers to track users, which plaintiffs argued reduced the appeal of Meta’s platforms for advertisers.
The lawsuit, brought by shareholders led by four Israeli insurers and pension funds, also accused Meta of failing to disclose that the company’s transition to the TikTok-like "Reels" format would hurt revenue.
According to the plaintiffs, the new format featured fewer ads per hour than older content types, resulting in decreased ad revenue.
However, in her 34-page ruling, Judge Rogers found no evidence supporting these claims. She noted that Meta’s eventual acknowledgment that Apple's privacy changes posed a potential $10 billion "headwind" in 2022 did not indicate that the company’s earlier statements were false.
Additionally, the allegations against Sandberg were based solely on media reports, which were deemed unproven.
“The court determines plaintiffs have not plausibly alleged violations of federal securities law,” wrote Judge Rogers, dismissing the lawsuit with prejudice and preventing it from being refiled.
The plaintiffs had argued that Meta's stock price plummeted by 53% within a year, wiping out over $500 billion of its market value. However, the court found no concrete evidence of misleading statements.
Other named defendants in the case included Meta CEO Mark Zuckerberg, CFO Susan Li, former CFO David Wehner, and Sheryl Sandberg.