Twitter to Pay Over $800M to Settle Class Action Lawsuit
Mike Sanders / 2 years ago
I think it would be fair to say that many of what you might consider the more ‘established’ social media platforms have, over the last 5 years arguably, been in something of a state of stagnation. Put simply, pretty much anyone who was going to sign up for them has already done so. Or perhaps did, and subsequently chose to leave for a newer/better alternative. While Facebook is clearly facing huge problems in this regard though, following a report via Engadget, it would appear that Twitter has just had to issue a huge $800M settlement cheque following a successful class-action lawsuit.
Twitter Settles Class Action Lawsuit With $809M Payment!
Initially represented in 2016, the class action lawsuit was backed by a significant number of investors in the social media platform. Why were they angry enough to issue legal action, though? Well, the allegation (and given the settlement, it does still technically have to be called as such), was that Twitter was deliberately exaggerating/overstating the platform’s membership growth over a period of time where, at best, it was really in a period better described as stagnation.
Although taking a leap of imagination, as the details are not specifically known to me, the likely conclusion from the group was that their investment in the Twitter platform was overpriced based on a misrepresentation of just how well the company was really doing at the time (in terms of gaining new members, and, by proxy, more advertising reach).
It should be noted though that when the class action suit was issued, Twitter’s stock value had just semi-plummeted to around 25% of its peak value. A pretty firm reason why many investors might’ve been a little peeved. Rather ironically though, it has recovered quite significantly since!
Payment Made – *Poof* It’s Gone!
With Twitter making a settlement agreement of $809.5M, while clearly not admitting any wrongdoing in a legally binding sense, the overall conclusion is that Twitter has essentially agreed here that it (probably – or should that be allegedly? – Assume the latter if you’re a lawyer for Twitter) did exaggerate just how well the platform was doing at the time. However, it is more than a little interesting that Twitter is arguably doing significantly better than it was before since the lawsuit was issued. In fact, in many respects, the company is in something of a moderate boom. Again, as noted above though, one theory is that this is simply more Facebook users migrating over to it as their ‘primary’ source of social media.
Newer and more interesting platforms will, of course, come along. It will be interesting to see though if the current mainstream options do manage to stick around for the next 10-15 years. And don’t say that they will for sure because you only have to look at Yahoo and AOL to see how quickly things can go from boom to bust!
What do you think? – Let us know in the comments!