A new filing in a lawsuit launched in 2015 against Facebook claims that the company developed a “malicious and fraudulent scheme” to exploit the data of its users’ friends to earn billions of dollars and force competitors out of business. The company suing Facebook, Six4Three, is a former startup alleging that Facebook defrauded it in the same way.
Facebook’s Scheme To Save Its Ad Revenue
The new filing by Six4Three says that Facebook’s desktop advertising revenues were in sharp decline in 2012, as users were rapidly switching to using Facebook on mobile instead of their PCs. Zuckerberg responded to this issue by forcing third-party developers to buy mobile ads or risk having their access to data at the core of their business cut off, according to the filing.
The filing also says that Facebook was luring third-party developers with promises of long-term access to both users and their friends’ data. As we know now, this decision has proven to be catastrophic, as it allowed companies such as Cambridge Analytica to harvest the data of tens of millions of people by asking for consent for data collection from only a few hundred thousand people.
It also shows that, unlike Zuckerberg’s attempt to paint this as another “error,” it was actually a decision made on purpose so that the company could increase its revenues.
The court documents state the following:
The evidence uncovered by plaintiff demonstrates that the Cambridge Analytica scandal was not the result of mere negligence on Facebook’s part but was rather the direct consequence of the malicious and fraudulent scheme Zuckerberg designed in 2012 to cover up his failure to anticipate the world’s transition to smartphones.
The documents also claim that Facebook was targeting successful developers who were using the Facebook APIs, looking to extract money from them, co-opt them, or destroy them. Six4Three alleges that up to 40,000 companies were “defrauded” in this way by Facebook.
Facebook Can’t Decide If It’s A Platform Or A Publisher
In the recent Cambridge Analytica Congressional hearings, Zuckerberg said that Facebook is a neutral platform. The company doesn’t want to be seen as a “publisher,” because that could put it under stricter regulations. However, the company constantly exercises “editorial” rights to censor or alter content on the site.
In Facebook’s recent submission to the court, the company seems to have embraced its editorial/publisher role in order to defend itself against Six4Three’s lawsuit:
Six4Three is taking its fifth shot at an ever expanding set of claims and all of its claims turn on one decision, which is absolutely protected: Facebook’s editorial decision to stop publishing certain user-generated content via its Platform to third-party app developers.
Sandy Parakilas, a former Facebook executive who worked for the company in 2011 and 2012, recently became a whistleblower and said that Facebook’s leadership simply didn’t want to know how users’ friends data was being abused. In a UK parliamentary hearing, Parakilas said:
They felt that it was better not to know. I found that utterly horrifying. If true, these allegations show a huge betrayal of users, partners and regulators. They would also show Facebook using its monopoly power to kill competition and putting profits over protecting its users.
Facebook wasn’t able to convince the court to drop Six4Three’s lawsuit, so a trial data was set for 2019.