U.S. Supreme Court spurns Google bid to avoid shareholder lawsuit

By: April Carson

The Supreme Court on Monday rejected Alphabet's bid to drop a lawsuit filed by shareholders charging the Google parent company with fraudulently hiding a security flaw that exposed private user data.

The Supreme Court declined to hear Google's appeal and affirmed a lower court decision that revived the case filed over the 2018 incident in which the firm was slow to disclose. The company's appeal was turned down.

The state of Rhode Island filed this case after the Wall Street Journal reported in October 2018 that Google had hidden the exposure of personal data for almost 500,000 users of Google+ — a Google-owned social network — out of fear regulatory scrutiny and reputational damage. The complaint charged the firm with making fraudulent or deceptive remarks in violation of the US Securities Exchange Act.

Following the announcement, Alphabet's stock price plummeted, lowering the company's market value by more than $50 billion.

Alphabet had argued that the lawsuit should be dismissed because the plaintiffs failed to show that the company had made any false statements about its security measures.

In March 2018, Google acknowledged that it had found the data exposure, but there was no indication of misuse, and therefore it decided to cease producing Google+ for consumers.

In February 2020, a judge in the Northern District of California dismissed the complaint, prompting the plaintiffs to appeal.

The 9th US Circuit Court of Appeals in June 2021 stated that the lawsuit created a "significant inference" that Larry Page, now Alphabet's CEO, and his subsequent replacement, Sundar Pichai, were aware of the issue and an internal memo on security issues but deliberately kept investors in the dark.

The 9th Circuit agreed with the plaintiff's argument that Alphabet tried to "buy time" by remaining quiet, in order to avoid the focused attention on Meta Platform's Facebook that was then being given because Britain's Cambridge Analytica had stolen data from tens of millions of its users.

The decision, announced on Monday, allows investors who bought Alphabet stock between April 29, 2019 and July 8, 2019 to sue the company over allegations it concealed from shareholders a potential data breach involving its Google+ social media platform.

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About the Blogger:

April Carson is the daughter of Billy Carson. She received her bachelor's degree in Social Sciences from Jacksonville University, where she was also on the Women's Basketball team. She now has a successful clothing company that specializes in organic baby clothes and other items. Take a look at their most popular fall fashions on bossbabymav.com

To read more of April's blogs, check out her website! She publishes new blogs on a daily basis, including the most helpful mommy advice and baby care tips! Follow on IG @bossbabymav

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