Meta Platforms Faces Legal Setback
Meta Platforms (META) saw its stock price drop by more than 1% on Monday after the U.S. Supreme Court rejected the company’s appeal to halt a class action lawsuit filed by its advertisers. While the broader market experienced slight gains, Meta’s stock was negatively affected by this legal decision.
Class Action Lawsuit Moves Forward
The Supreme Court’s ruling allows the class action lawsuit against Meta to proceed. The advertisers involved are seeking damages that could exceed $7 billion, accusing Meta of misleading them by counting the number of accounts reached rather than the actual number of users. This lawsuit could involve millions of advertisers, both individuals and businesses.
Impact on Meta’s Advertising Revenue
This lawsuit is particularly important as Meta heavily relies on advertising for its revenue. While the company has the resources to defend itself in the case and pay any potential damages or settlements, maintaining a good relationship with its advertisers is critical for its continued success.
Should You Invest in Meta Platforms?
It’s worth noting that the Motley Fool’s Stock Advisor team has recently identified 10 other stocks they consider better investment options at the moment. Meta Platforms was not included in that list, suggesting other companies may offer better potential returns.
Legal Battle Moves to Federal Court
The U.S. Supreme Court’s decision leaves intact the appeals court ruling, which said advertisers could band together to seek damages from Meta. The lawsuit, titled Meta v. DZ Reserve, 24-384, will now move forward in federal court in San Francisco. Meta had argued that the diverse nature of its advertisers made it impossible for them to join in a single lawsuit, but the court ruled otherwise.
Meta Platforms: A Brief History
Meta Platforms, Inc., originally known as Facebook, Inc., was founded in 2004 by Mark Zuckerberg, along with Eduardo Saverin, Andrew McCollum, Dustin Moskovitz, and Chris Hughes, while they were students at Harvard University. Initially, Facebook was a social networking platform exclusive to Harvard students but soon expanded to other universities and, eventually, to anyone over the age of 13 with a valid email address.
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Key Milestones:
- 2004 – Facebook’s Launch: Facebook was launched on February 4, 2004, originally intended to connect college students. It quickly gained popularity, expanding across the U.S. and globally.
- 2005 – Investment and Growth: In 2005, Facebook received a $12.7 million investment from Accel Partners, which helped the platform expand its reach.
- 2007 – Facebook Becomes a Business: In 2007, Facebook began generating significant revenue through advertising. It also became a major player in the social media industry.
- 2012 – IPO and Global Expansion: Facebook went public in 2012 with an initial public offering (IPO), raising $16 billion. By this point, Facebook had over 1 billion users and was firmly established as the world’s leading social media platform.
- 2014 – Acquisitions: Facebook made key acquisitions, including buying Instagram for $1 billion and WhatsApp for $19 billion, further expanding its influence in the social media and messaging spaces.
- 2021 – Rebranding to Meta: On October 28, 2021, Facebook Inc. rebranded itself as Meta Platforms, Inc. to reflect its expanding focus beyond social media. Meta’s goal was to build the “metaverse”—an immersive virtual world combining augmented reality (AR), virtual reality (VR), and social connections.
Current Focus: Meta Platforms now includes Facebook, Instagram, WhatsApp, and Oculus, and is heavily investing in virtual and augmented reality technologies to shape the future of online interaction. Meta’s vision is to create a digital ecosystem where users can interact in a virtual world, work, socialize, and engage in new ways.
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