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U.S. Supreme Court Declines Meta’s Bid to Avoid Advertisers’ Lawsuit

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The U.S. Supreme Court on Monday rejected an appeal by Meta Platforms, the parent company of Facebook and Instagram, to block a class-action lawsuit by advertisers accusing the company of inflating audience metrics and overcharging for advertisements.

The decision upholds a ruling by the 9th U.S. Circuit Court of Appeals in San Francisco, which allowed advertisers to pursue damages collectively for Meta’s alleged misrepresentation of the “potential reach” of its ads. The class-action lawsuit, led by former Meta advertisers DZ Reserve and Cain Maxwell, claims that Meta exaggerated its ad viewership metrics by as much as 400% by focusing on the number of social media accounts rather than the actual number of individuals.

Legal Background

The appeals court’s 2-1 decision in March 2024 ruled that the advertisers could proceed as a group, arguing that their claims stemmed from a “common course of conduct” by Meta. This approach allows potentially millions of advertisers who paid for ads on Facebook and Instagram since August 15, 2014, to collectively seek damages, which they estimate could exceed $7 billion.

In its appeal to the Supreme Court, Meta challenged the lower court’s reliance on the “common course of conduct” test, arguing that other federal appeals courts have rejected this standard. Meta also contended that not all advertisers would have found the alleged misrepresentation significant or relied on it when purchasing ads.

Financial and Legal Implications

Advertising remains the cornerstone of Meta’s revenue, accounting for $116.1 billion in the first nine months of 2024. A decision in favor of the plaintiffs could result in substantial financial penalties for the tech giant and set a precedent for future class-action lawsuits involving advertising metrics.

Class actions are often favored by plaintiffs in cases involving widespread claims, as they can lead to larger recoveries at lower costs compared to individual lawsuits.

The lawsuit highlights increasing scrutiny of tech companies’ advertising practices and the metrics used to evaluate the effectiveness of their platforms, which are critical to advertisers’ decision-making and spending.

 

Malaysia Grants Licences to WeChat and TikTok Under New Social Media Law

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Malaysia’s communications regulator has granted licences to WeChat and TikTok to operate under the country’s new social media law, which aims to combat rising cybercrime. The law, which took effect on January 1, mandates that social media platforms and messaging services with more than 8 million users in Malaysia must obtain a licence, or face legal action.

The Malaysian Communications and Multimedia Commission (MCMC) announced on Wednesday that Tencent’s WeChat and ByteDance’s TikTok have been granted their licences. Messaging platform Telegram is in the final stages of the application process, while Meta Platforms, which owns Facebook, Instagram, and WhatsApp, has begun the licensing procedure.

However, some platforms have not applied for the licence. X (formerly Twitter) has not submitted an application, stating that its local user base does not exceed the 8 million threshold. The regulator is currently reviewing the validity of this claim. Additionally, Alphabet’s Google, which operates YouTube, has not applied for a licence either, citing concerns about YouTube’s video-sharing features and how they relate to the new law. The MCMC has indicated that YouTube must still comply with the licensing requirements.

The law requires platforms to adhere to guidelines to curb harmful content, including online gambling, scams, child pornography, cyberbullying, and offensive content related to race, religion, and royalty. Malaysia has seen an uptick in harmful social media content in early 2024, prompting authorities to urge platforms like Meta and TikTok to enhance their monitoring efforts.

While companies do not disclose their user numbers per country, independent data suggests WeChat has 12 million users in Malaysia, while TikTok has around 28.68 million users aged 18 and above. Facebook has 22.35 million users, YouTube has 24.1 million users, and X has 5.71 million users in the country.

 

S&P 500 Rises 1% on Christmas Eve, Tech Stocks Drive Gains: Live Updates

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The U.S. stock market saw a strong performance on Christmas Eve, with the S&P 500 gaining 1.1% to close at 6,040.04. The Dow Jones Industrial Average also rose by 0.91%, adding 390.08 points to reach 43,297.03, while the Nasdaq Composite climbed 1.35% to finish at 20,031.13. A significant contributor to the Nasdaq’s rise was a 7.4% increase in Tesla’s stock price, alongside gains in Amazon and Meta Platforms, which each rose over 1%.

The New York Stock Exchange closed early at 1 p.m. ET, and the bond market followed suit, closing at 2 p.m. The market will remain closed on Wednesday for Christmas Day.

Tuesday’s gains marked the beginning of the “Santa Claus rally,” a seasonal trend in which the market tends to see stronger performance during the last five trading days of the year and the first two days of January. Historical data from LPL Research shows that since 1950, the S&P 500 has averaged a 1.3% return during this period, far outpacing the typical seven-day return of 0.3%.

Despite the upbeat performance, experts advise caution. Paul Hickey, co-founder of Bespoke Investment Group, mentioned on CNBC’s “Squawk Box” that while the market shows positive momentum, it’s important to temper enthusiasm, as the market has already rallied significantly.

Over the past two days, the S&P 500 has gained 1.8% for the week, with the Dow up about 1%. The Nasdaq has surged 2.3% week-to-date, fueled by strong gains in megacap tech stocks. Additionally, the S&P 500 has turned positive for the month, rising by 0.1%. The tech-heavy Nasdaq has seen an impressive 4.2% increase in December, with major players like Google’s parent Alphabet up 16%, Apple up nearly 9%, and Tesla soaring by about 34%. However, the blue-chip Dow remains down by around 3.6% for the month, on track for its worst monthly performance since April.

On the corporate front, American Airlines experienced fluctuations in its stock price on Tuesday after the airline temporarily grounded all flights in the U.S. due to a technical issue during one of the busiest travel days of the year. Despite the disruption, the stock ended the session up 0.6%.

In other retail news, analysts at Jefferies expressed optimism about toy sales this holiday season. Their store checks indicated high traffic and lower inventory levels compared to earlier in the season. Board games, in particular, were reported as strong sellers both in-store and online. Jefferies also noted that discounts were lower than the peak Black Friday levels.

In the toy sector, Mattel and Hasbro stocks showed mixed results. While Mattel’s shares are down over 5% year-to-date, Hasbro has seen a more significant gain of 11%. However, Hasbro has faced recent declines, with its stock down nearly 13% month-to-date, while Mattel’s shares have fallen 6%.