Jason Kint Profile picture
Sep 21, 2021 38 tweets 15 min read
!!! news. mother of all lawsuits quietly filed last month vs Facebook in Delaware. I'll explain why it avoided notice until now in a bit but Zuckerberg, Sandberg, CFO, board inc Peter Thiel and Palantir are defendants - it's a result of sealed docs between FB execs and board. /1 Image
Major new plaintiff allegations - many long concerning:
1 FB spent billions to protect Zuckerberg personally
2 claims "epic corporate governance breakdown"
3 adds list of "insider trading" defendants
4 documents Zuckerberg misled Congress /2 Image
It's a whopping 390 pages and there is a related 220 page suit filed in same court on the same day. Together they bring the kitchen sink on allegations as to how the platform gained market power, failed its 2012 FTC Consent Decree, covered-up and failed to disclose data harms. /3 ImageImage
As background, State of Rhode Island originally had sued Facebook claiming it WAY overpaid FTC by as much as $4.9B to protect Zuckerberg. It won rights to inspect a lot of docs from 2013-2019 leading to this new lawsuit which draws on a ton of evidence from all over the place. /4 ImageImage
The central allegation kicking this off is the FTC's draft settlement named Zuckerberg personally which would have caused all sorts of issues for him. The board, entirely controlled by Zuckerberg, refused and paid $5B to protect him so FTC didn't name him personally. /5 Image
The allegations in this new derivative lawsuit upon seeing the board docs is that all of this is a result of the lawsuit calls an "epic governance failure," more on that in a minute. /6 Image
Original suit of course was filed due to Cambridge Analytica. New lawsuit has more details than anything I've seen (many sealed). Reminder, case centers on millions of stolen and sold Facebook users' data. According to suit, only .31% had consented to it being shared. /7 Image
As Zuckerberg's close buddy, Bosworth, helped broadcast at the time - Facebook claimed it wasn't a "breach" or "hack" because the systems were designed and known to work the way they did. The platform was the hack. But of course, a reminder, Facebook doesn't sell your data. /8 Image
As we learned in earlier discovery from Attorney General of DC combined with pressure and hearings from the UK, employees knew about Cambridge Analytica. They called it "sketchy" even before Guardian brought their attention to it. /9 Image
Here is another reference to knowledge which was confirmed by the UK data commissioner, too. AOC famously asked about the knowledge and awareness in a hearing in late 2019 causing Zuckerberg appeared to stumble on his answer to keep his story straight. /10 Image
And it was politically sensitive. A Fall 2020 Channel 4 News documentary even reported and uncovered more details on how the data was used for voter suppression and microtargeting in key battleground states. But that's for a different thread. /11 Image
This lawsuit even includes the fact Facebook hired one of the co-founders of the company that mined and sold the Facebook data to Cambridge Analytica at a sensitive time. His entire tenure and existence is still a deep mystery in all of this but good to see in the lawsuit. /12 Image
and again, this lawsuit isn't about politics but instead antitrust, governance and SEC-related failures. A reminder to the antitrust matters: one core allegation is Facebook accelerated its shift to mobile leveraging data reciprocity deals. It's very much in here, too. /13 Image
We know this from previously unsealed emails and messages which showed the constructs of cutting off data feeds to apps that were seen as competitive threats or weren't willing to provide revenues for Facebook. Again, ladies and gentlemen, they didn't sell your data. /14 Image
A hat tip at this point to UK Parliament, specifically MP Damian Collins, who really led the world in uncovering as much of the details here either through accountability pressure and leaked docs as they tried to get Facebook leadership to answer questions at hearings. /15 Image
There is a lot in the lawsuit around Facebook's failure to honor its 2012 Consent Decree. This includes sealed sections that at least appear to suggest the board and leadership never even reviewed required PWC audits or connected any dots to Cambridge Analytica. /16 Image
Speaking of PWC, this is new to me. It appears they did an investigation in 2019 after everything hit the fan for Facebook but their engagement was ended before the report was finalized. (note, 220 docs are board materials turned over as part of original suit). /17 Image
Of course, Zuckerberg's control of the board is not new and is drawn on the separate class of stock (negotiated with assistance by current board member, Marc Andreessen), he controls voting power. He even controls the Nominating Committee to the board among allies. /18 Image
The lawsuit allegations claim this results in a board where directors are ousted regularly and are mostly in some way conflicted in their relationships to the leadership or the company. These is a lot of pages on this issue. /19 Image
Lawsuit also claims, "Congress Calls Defendant Zuckerberg To Question And Is Met With Dishonesty" regarding false or misleading answers to Congress. I've documented these concerns in threads previously but good to see claims going before a court. /20 Image
in testimony, Zuckerberg regularly claimed users maintain control over their data - there are several pages of examples in the lawsuit. However, NYT reported Facebook was actually whitelisting companies to still receive user data through and after his testimony. /21 ImageImage
Zuckerberg and Facebook also made a big deal how they reacted quickly in Dec 11, 2015 when they found out - supposedly from press reports - what Cambridge Analytica was doing including implying they scrambled to get legal certification the data was deleted. Not so much. /22 ImageImage
Another allegation in the lawsuit of misleading testimony is Zuckerberg suggesting Facebook doesn't collect data from other apps. It doesn't mince words.
"The Zuckerberg testimony quoted in the immediately preceding paragraph is materially false and misleading." /23 Image
Lawsuit expands further with research that "61% of apps...automatically transfer data to Facebook" upon launch. Yes, that's why Facebook is freaking out about Apple's new privacy rules which kneecap Facebook's surveillance ads business (which continues to thrive on Android). /24 Image
The "Insider Trading" allegations relate and document the hundreds of millions to billions made by insiders who would have been aware or neglected their governance duties as documents and risks were filed with SEC making *actual* harms realized read like *hypothetical* risk. /25 Image
And of course, the lawsuit even catches up to reports in 2021 noting the lack of change in Facebook attitude as they treated news in April 2021 of 530 million records being exposed as an issue only if the press volume didn't continue to decline. PR also confused press on it. /26 ImageImage
Final point, the lawsuit asks for this in relief but I would also note there is a lot of sealed board docs. The Attorney General of DC is also deep into discovery and depositions (hearing next Tue 9/28 @ 2:30pm) in much-related case.
Someone needs to wake up the SEC, though. /27 Image
As to how this suit wasn't noticed, Delaware Chancery charges a fortune per document limiting public awareness. Original case to inspect board docs (Rhode Island) was won, derivative suits were amended/filed/consolidated in shell game. I followed the breadcrumbs. Voila. /eof /28 ImageImage
I see this is taking off so a reminder to everyone this is the plaintiffs' claims. But it does bring together an enormous amount -and- they decided to file after inspecting board docs. Everything was from the 2nd complaint, there is also the Rhode Island suit filed same day.
For the @AOC fans, the R.I. lawsuit also includes Zuckerberg's bumbling answers when surprised during a crypto hearing which certainly appeared as if he was trying to keep his story straight. Image
Here is Bloomberg Law on the original lawsuit victory to inspect the documents. If you want my highlighted versions, shoot me an email or DM. If someone posts the lawsuits, I'll add a link here. news.bloomberglaw.com/tech-and-telec…
Here is a thread for those interested in going down the rabbit hole on video of unanswered questions and misleading answers from the various hearings.
Also, strongly encourage anyone with the complaint to read it thoroughly, there are a lot of allegations in it particularly how conflicts of interest and the board governance. I just had to end my thread.
And yes, newsrooms and press should work to get these unsealed. The largest settlement, by far, in history in which the leadership was able to squeeze into the board committee meetings and influence the outcome deserve more sunlight. ImageImageImageImage
👀 Chair of the Special Committee that would review the $5 billion settlement emailing Sandberg as everything hit the fan.

Sheryl,

-Ken Image
hat tip to @FBoversight as they have posted the complaints here.
Will add any press reports I see regarding the above thread ⬆️. Politico just moved a report. politico.com/news/2021/09/2…
Several other good reports on this thread but Gizmodo just filed one of the clearest. Highly recommend. gizmodo.com/facebook-paid-…

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More from @jason_kint

May 20
Aah, Google is now putting out statements regarding the massive adtech bill introduced yesterday by antitrust leadership in both parties in both chambers. They had to say something and you can learn a lot from Google's statements. Shall I break them down? /1 Image
Narrative from those who swim in current adtech business - it won't hurt Google much if they have to divest adtech biz - this belief is critical to G's defense. We've seen it with privacy laws, too. You can learn real truth by how Google and its reps fight behind closed doors. /2 Image
to believe divestiture of adtech won't hurt G, you must ignore:
(a) majority of G's data is 3rd party not 1st
(b) antitrust momentum limiting its gatekeeping (browser/OS/search)
(c) G's use of market power over demand/DSP as choke point to drive revenue to search and YouTube /3 Image
Read 15 tweets
May 19
boom. big breaking news that would expedite dealing with the alleged harms in the state antitrust lawsuits and investigations in EU, et al.
chair and ranking member of senate antitrust committees plus bipartisan co-sponsors are on it. smart. /1 Image
when google (or its friendlies) attempts to argue its dominance on buy/sell/all sides of market is different than wall st, "Court docs in the Texas-led suit quoted a Google employee comparing its advertising technology business to 'if Goldman or Citibank owned the NYSE.'" /2
it's worth noting this isn't just about Google as law recognizes any adtech intermediary with significant market power (we've seen this with DSPs) can abuse it to serve other interests including its own. Law would put an auditable 'best interest' duty on them to act as agents. /3
Read 6 tweets
May 17
Big Facebook motion hearing in DC tmw at 9:30a. You may recall NdCal suit where FB/Gibson Dunn was scorched inviting sanctions for discovery abuse? The parallel case in DC by AG was close to deposing CEO Zuckerberg then suddenly turned in FB's favor after Judge Ross assigned. /1 ImageImage
if you want to explore all the sensitive discovery Facebook has resisted now moving from the lawsuits for the Cambridge Analytica cover-up exposing broader anticompetitive and data protection allegations at the company. /2
But that's Northern District of California (ironically, Facebook's home turf) and in DC, as I mentioned, there is a new Judge and Facebook and Gibson Dunn seemed to have gaslit him that things needed to end despite never really starting (see NdCal). /3
Read 8 tweets
May 9
Washington Post just moved a report mainly focused on Twitter’s Head of Trust and Safety. I find this report insanely important - much larger implications. The reporters on it have particularly nuanced understanding of company, its processes and those at other social media. /1
Oremus, in particular, has reported in the past on how Twitter importantly firewalls its content policy decisions away from its PR and policy teams - something Facebook notoriously doesn’t do and panders to PR and its own lobbyists which the others have also reported on. /2
We’ve long worried about censorship of accounts. Twitter actually was very innovative using “curtains” and warning labels rather than removing posts/accounts which I appreciated. So they added context and speech rather than removing it. /3
Read 12 tweets
May 7
Hundreds more pages of discovery unsealed last night in the case where Facebook and its law firm are likely to be sanctioned for discovery abuse. One area FB has fought is providing ALL the data they have on the named plaintiffs. I hesitate to share this - it's not the prize. /1 Image
Recall this is a Cambridge Analytica suit rightly alleging real issue was FB sharing of data by design...so many many Cambridges. FB tried to limit discovery to turning over the plaintiffs' Download Your Information file. Court ruled hard against FB inviting sanctions of FB. /2
Court ordered FB to turn over all it has on Named Plaintiffs. FB argues this would be too cumbersome - take a year. Meanwhile, FB turned over "DYI" files attempting to exhaust. Redactions are removed so we do learn it included 'politics,' 'religion" and 'personal conflicts.' /3 Image
Read 8 tweets
May 5
News flash. Facebook, and its unchanged leadership, are every bit as awful of a company as you can imagine. Whistleblower docs just dropped in WSJ report on its strategy to block news during a global pandemic to limit hit to profits if it had less market power over industry. /1 Image
The timing was terrible and the reports indicated Facebook went broad with its intentional blocking knowing there would be collateral damage (and there was) which happened to health services and news organizations at a very sensitive time in the pandemic. /2 Image
this blocking of health services brings back memories of reports a few years earlier that Facebook “news” lead Campbell Brown promised Australian publishers they would be in hospice if they didn’t “work with them.” /3 Image
Read 8 tweets

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