Times Two: Facebook Sued over Privacy Concerns and FB IPO

Morgan Stanley, Facebook and Goldman sued over Facebook IPO; Facebook Class Action Lawsuit Seeks $15 Billion for Privacy Violations

Staff Report

NEW YORK, NY - While the price of Facebook shares has not reached the level it was released at during the FB IPO, the social media company has been in the news for other reasons. Within the last two weeks, two lawsuits have been filed against Facebook - in New York and California.

Last week, on Thursday, May 17, in federal court in San Jose, California, a class action lawsuit was filed against Facebook. The plaintiffs claim Facebook abusively tracked subscribers even after they logged out. The suit consolidates 21 lawsuits nationwide.

Additionally, just today, Facebook and its IPO underwriters are being sued by investors who claimed they were misled in the purchase of the social network firm’s stock, especially when it came to valuation of the company and revenue predictions. 

The investors have said the members of a proposed class action lawsuit have lost more than $2.5 billion since the Facebook IPO last week, according to a complaint filed today in Manhattan federal court.

Facebook has been struggling with making money from people adding status updates from their phone instead of via the website on a laptop, netbook or tablet computer. There are also some fears that game developers like Zynga may bypass Facebook on the smartphone to keep more of the revenue for themselves.

PC Magazine wrote:

Furthermore, as The Wall Street Journal points out, Facebook receives a disproportionate amount of revenue from Zynga and other game developers. That works just fine on the desktop. But on smartphones and tablets, Facebook hasn't yet managed to create a platform that will lure those developers into essentially residing within Facebook, rather than writing their own apps for iOS and Android and keeping all the revenue. One does not launch Facebook's mobile app to play games like "Mafia Wars," and it looks like this won't be the case for several years.

Facebook stock was trading at 32.07 or up +1.07‎ (3.45%‎) from the opening price of 31.37 on May 23, 2012 at 3:21pm ET.