Meta Sued for Invasion of Privacy in Potential US$1T Class Action

Meta's main office sign with graffiti, The Writing on the Wall

The lawsuit claims that users of Meta’s Instagram, Facebook and Messenger apps have become the victims of a recent, intentional corporate campaign to unlawfully track, collect and sell detailed user data including personally identifiable information, private health records, text entries, and other sensitive confidential facts. 

The lawsuit, filed in US District Court for the Northern District of California on Thursday and seen by The Media C-Suite covers only users in the United States, but the potential harm to millions of internet users around the world may be substantial if the allegations prove true.

At the heart of the Class Action Complaint is a claim that Meta Platforms, Inc. suffered significant financial losses when Apple’s iOS 14 update began protecting users of Apple devices, including iPhones and iPads, from 3rd party tracking of internet activity. From April 2021, all third-party app developers on Apple devices were required to obtain users’ informed consent to track internet activity. As a result, the lawsuit alleges that Meta lost significant revenues and engineered a work-around that directed all users of the apps for Facebook, Instagram and Messenger to be directed to an “in-app browser” that allowed Meta to record and collect detailed user data and internet activities without notification or consent. 

See the full Class Action Complaint here.

Apple iPhones comprise nearly half (48.7%) of the total number of smartphones used in the United States in 2022 and an estimated 28% worldwide, according to data published by Statistica.

According to the lawsuit, as a result of Apple’s anti-tracking measures, Meta began directing users of Facebook, Instagram and Messenger apps to an in-app browser that by-passed the user’s choice for viewing websites and injected a JavaScript code into the web-sites its users visited. The level of user information and internet activity that can be collected with this method of tracking is much higher and more detailed than Meta enjoyed previously.

According to Felix Krause, an on-line privacy researcher quoted in the lawsuit, Meta’s JavaScript code is injected into every website clicked to from within the Facebook, Instagram and Messenger apps. Until Meta faced Apple’s anti-tracking measures, in-app browsers were in decline according to Krause. In his detailed report, Krause asserts that with this technique, Meta could potentially track and collect every click, piece of input or view that every user engaged in, including usernames and passwords for banking or other sites they might visit.

See the full report here.

Meta, and other social media platforms, are motivated to collect and make available as much user data as possible to attract advertisers.  How Meta, it’s advertisers or anyone else who chooses to purchase such data makes use of it is of increasing concern to privacy advocates, law-makers and security professionals globally.

As disclosed by Meta, advertising across its several social media platforms accounted for revenues of US$27.2 billion during the 3rdQuarter of 2022 representing 98.2% of the company’s total revenues. 

On Wednesday, October 26, Meta reported profits of US$4.4 billion for the 3rd Quarter of 2022, the fourth quarter in a row that the Company’s profits have fallen and a new trend not seen at the publicly traded company for over a decade. 

According to the Wall Street Journal, Meta shares fell by 5% on Wednesday and by another 23% in pre-market trading on Thursday morning to US$100.45, placing the company’s market value below US$300 billion for the first time since 2016.

See the full WSJ article here.

In addition to anti-tracking trends and concern among its users, Meta’s portfolio of social media platforms face a host of challenges to its massive advertising business according the WSJ article, including macro-economic pressure on spending by advertisers. 

If the District Court in California finds against Meta in this Class Action Complaint, the company may find itself with over a US$1 Trillion in civil judgement to contend with. And that is only in the United States. Given the headwinds it now faces globally, it makes sense that Meta’s CEO, Mark Zuckerberg is focused on a distinctly different world view. His strategic shift to a “metaverse”, lead by Meta’s Reality Lab unit and the development of listing flagship, Horizon Worlds, seems markedly at odds with any world on the actual horizon or with reality itself. 

For Meta, and its shareholders, that strategy may be all that stands between the company and its demise. Unfortunately, there is little but faith remaining in Meta’s ability to diversify away from the seemingly dirty business of user data collection and sale in this world, or the next. 

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