The stock of Facebook’s holding company Meta Platforms Inc. hit the headlines yesterday for the wrong reasons as Ken Paxton, Attorney General of Texas, filed a multi-billion dollar lawsuit for supposedly using unapproved biometric info gathered from millions of Texas residents.
The lawsuit blames the company for using a facial recognition system, which is in violation of the state’s privacy protection rules pertaining to biometric information. Notably, the company has discontinued the use of the technology in November 2021. The stock of Facebook closed at $221, up $3.30 or 1.52% from the prior close.
In a press release, the office of the attorney general has blamed Facebook for capturing and utilizing the biometric info without receiving necessary approval, which is a breach of Texas law. Furthermore, the official news release reveals that the lawsuit alleges the social media platform provider of retaining biometric identifiers pertaining to millions, gathered using the pictures and videos uploaded by customers.
According to the lawsuit, through this unlawful activity, Facebook misused the personal data of Facebook users to grow rapidly and make enormous profits.
Paxton said that Facebook would not be allowed to make money by exploiting the credentials of individuals and putting their safety at risk. He opined that the entire saga is another illustration of the tech firm’s unethical business strategies, and it should end. The attorney general also stated that he would keep fighting to ensure the privacy and security of Texas residents.
As per the attorney general, Facebook continually collected biometric identifiers innumerable times without approval, despite having a clear idea about the Deceptive Trade Practices Act and Capture or Use of Biometric Identifier Act of Texas.
The lawsuit blames Facebook of misleading the public by hiding its routines as Texas residents who utilized the application were unaware of the reality that the company was gathering biometric data from uploaded videos and photographs. Without giving additional info, the lawsuit alleges that users of the social media platform were not informed that the company was revealing confidential info of users to other organizations, which also misused it for their benefit.
The lawsuit further pointed out that contrary to other kinds of identifiers, including social security numbers, which allow the flexibility of getting new ones in case of theft or misuse, biometric identifiers cannot be changed. In case biometric data ends up in the hands of a malicious party, the info can be misused while the victim is alive.
In November, along with plans to discontinue the facial recognition feature, Facebook revealed its intention to wipe out all pertinent info gathered in the past few years. However, the Texas government directed Meta to retain the data for further scrutiny.
The lawsuit reads: “Facebook frequently failed to erase acquired biometric information in a timely manner, putting Texans to aggravating dangers to their mental freedom, safety, and overall security. The firm willfully collected biometric data for its commercial gain, in order to continuously update its facial recognition system, resulting in the development of a robust artificial intelligence platform that stretches to all corners of the globe and entraps even those individuals who have purposefully shunned using Facebook services.”
Meta has refuted the allegations and intends to defend its position aggressively.
Interestingly, Facebook resolved a similar lawsuit in 2021 by shelling out $650 million. The class-action lawsuit, filed in 2015, alleged the firm of breaching the Biometric Information Privacy Act of Illinois by retaining info about users’ faces without their approval.
For several years, Facebook enabled people to alter settings and utilize the facial-recognition feature. However, the settings, which became immensely popular and paved the way for the sharp growth of Facebook, would result in capturing of videos and photographs of the user.
The lawsuit is expected to keep the stock of Meta range-bound in the short term.
Technically, the stock of Meta is trading far below its 50-day moving average, while the MACD indicator has a negative reading. Therefore, we are anticipating the stock to remain in a downtrend in the short term.
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