Nonprofit urges criminal investigation of Zuckerberg and Sandberg

A liberal nonprofit wants US federal authorities to investigate whether Meta (formerly Facebook) co-founder and CEO Mark Zuckerberg and COO Sheryl Sandberg broke the law.

A liberal nonprofit organization that advocates for competition in the marketplace is urging federal authorities to investigate whether top executives, including Mark Zuckerberg and Sheryl Sandberg, broke the law, adding personal accusations to the allegations the company later faces. of a whistleblower disclosures.

The Washington-based American Economic Freedoms Project will send a letter Friday to leaders of the Department of Justice, the Securities and Exchange Commission, and the Federal Trade Commission offering examples of what it identified as possible wrongdoing and asking agencies to open investigations.

The allegations include that executives inflated video metrics and misled advertisers; miscounted users and misrepresented advertising reach; did not disclose inaccurate user counts; and lied to Congress about users’ control over data. The group said these allegations merit a criminal investigation, but it is unclear whether the letter will spur federal authorities to act.

Facebook declined to comment on the letter and a description of the allegations it contained.

The left-wing nonprofit was founded in early 2020 by advocates of stronger antitrust enforcement. The group applauded the Biden administration’s appointment of Lina Khan to chair the FTC and Jonathan Kanter to lead the Justice Department’s antitrust division. He has also supported bills to target big tech companies for their dominance, acquisition strategy, and treatment of competitors.

Funding for the group comes from foundations and individuals, including the Economic Security Project, the Omyidyar Network, and the Nathan Cummings Foundation.

Chris Hughes, who started Facebook with Zuckerberg and has been an outspoken critic ever since, is the co-chair of the Economic Security Project. Other entities associated with tech billionaire Pierre Omidyar also supported Frances Haugen, the former Facebook employee who became a whistleblower.

Facebook, which announced Thursday it would change its corporate name to Meta Platforms Inc., has come under fire on several fronts in Washington since Haugen turned over a trove of internal documents to the SEC, Congress and journalists. Friday’s letter cites documents related to two ongoing court cases, as well as Haugen’s files revealing internal discussions on Facebook.

“It is clear that Facebook leaders simply do not believe that they will ever face a significant penalty for illegal behavior,” according to the letter, which was obtained by Bloomberg. “Facebook’s long history of unethical and potentially illegal behavior deserves criminal sanction.”

Haugen filed eight complaints with the SEC based on his documents, and the FTC was already challenging the company’s earlier acquisition of Instagram and WhatsApp. But opening new investigations to hold executives personally accountable would be a new strategy for federal agents.

Even after years of complaints in Washington about Facebook’s behavior, there have been few serious consequences for the social network, which is worth nearly $ 900 billion and has nearly 3 billion users. Years of contentious hearings in Congress have yet to result in meaningful regulation, and billions of dollars in fines from US and European regulators have done little to change the business model or behavior of the company.

AELP’s letter argues that not only are the fines insufficient to deter corporate wrongdoing, but that company executives personally benefited from the criminal activity. “We are not in favor of fines, because over the years they have proven to be quite ineffective,” Krista Brown, the group’s senior policy analyst, said in a telephone interview.

The SEC, which only files civil, not criminal cases, is likely already investigating whether Facebook misled investors, given the high-profile nature of Haugen’s complaints, according to David Rosenfeld, a Northern Illinois University professor who previously helped to lead the enforcement of SEC law. York Office. Whether the SEC investigates individual executives “depends on their involvement, their personal knowledge, whether they were aware of the matter, and the level of intent to deceive or defraud,” Rosenfeld said.

The court cases cited in the letter are DZ Reserve v. Facebook and the Rhode Island Employee Retirement System v. Facebook.

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