Facebook stock (FB) plunged after a nine-state antitrust investigation was announced against the social-media monopoly. As of this writing, Facebook is the worst-performing stock in the Nasdaq.
Facebook tumbled 1.9% shortly after the attorneys general of eight states and the District of Columbia launched their investigation. The multi-state coalition includes Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio and Tennessee.
Facebook is already being investigated by the Federal Trade Commission for alleged antitrust violations. That’s separate from the record-setting $5 billion FTC fine FB agreed to pay for violating user privacy.
New York Attorney General Letitia James vowed to investigate “whether Facebook stifled competition and put users at risk.” Specifically, James will examine if Facebook:
CCN.com presaged this crackdown in January 2019, when we uncovered a damning report claiming Facebook is committing mass fraud. How? By overcharging companies for the ads they place based on Facebook’s artificially inflated user statistics.
Keep in mind that the larger Facebook’s user base is, the more money it can charge for ads.
The shocking exposé was written by Aaron Greenspan, a tech entrepreneur and former Harvard classmate of Mark Zuckerberg.
According to Greenspan’s 70-page research report, the significance of Facebook’s systemic fraud “cannot be overstated.”
Greenspan wrote: “If, as we allege, Facebook is lying about its fake accounts, that means that it could be liable to its advertising customers for billions of dollars in ill-gotten gains — over and above what advertisers have already sued over.”
According to Statista, Facebook’s 2018 ad revenue topped $33.8 billion (see chart below).
Facebook’s advertising revenue in 2017 topped $39 billion. By 2020, it’s expected to approach $81 billion.
Greenspan claims Facebook has been inflating its user account statistics since 2004.
Moreover, he says its management is aware of the problem, but hasn’t done much to correct it.
As CCN.com reported, Mark Zuckerberg is already under fire over Facebook’s epic data-breach scandals. Facebook is accused of violating a 2011 consent decree under which it agreed to get user permission before sharing their data with third parties for profit.
In April 2019, Facebook shareholders demanded that Zuckerberg be replaced as chairman. Shareholders blasted Zuckerberg for Facebook’s tsunami of privacy breaches, which they blame on his gross mismanagement.
The furious investors also noted that the scandals caused Facebook stock to tank to record levels at various points in 2018. At the time, the Facebook board (of which Zuckerberg is chair) rejected the shareholder proposal to fire him.
In recent weeks, Facebook’s Libra cryptocurrency project has also fueled suspicion from both European and American regulators.
Just days ago, a member of the European Central Bank’s executive board sounded the alarm, calling the Libra network “treacherous and cartel-like.”
However, the antitrust investigations launched today focuses on Facebook’s dubious business practices as a social-media monopoly, not on Libra. Either way, Facebook is in a lot of trouble.
Last modified: July 13, 2020 1:36 PM UTC