Lawrence Hurley

WASHINGTON, (Reuters) – The U.S. Supreme Court declined Monday to hear Alphabet Inc (NASDAQ:) Inc’s attempts to thwart a shareholder lawsuit accusing Google of concealing a security flaw that exposed private user data.

Alphabet appealed, but the justices upheld the ruling by a lower court. This revived the suit over the 2018 incident the company failed to disclose.

Following an October 2018 Wall Street Journal article, which claimed that Google had covered up the private information of nearly 500,000 Google+ users, Google+ is a social networking owned by Google, and because of fear of regulatory scrutiny, and reputational risk, the state of Rhode Island filed the lawsuit. According to the U.S. Securities Exchange Act, the lawsuit alleged that the company made false and misleading statements.

Alphabet lost more than 50 billion dollars in market value after its share price plunged following disclosure.

Google finally admitted to having discovered the data leakage in March 2018. However, there wasn’t any evidence that misuse was occurring and shut down Google+ consumer.

The lawsuit was dismissed by Jeffrey White, U.S. District Judge in San Francisco in February 2020. This prompted the plaintiffs’ appeal.

San Francisco-based 9th U.S. Circuit Court of Appeals ruled in June 2021 that the lawsuit brought out a “strong conclusion” that Alphabet’s Chief Executive Larry Page (then based in San Franscisco) and Sundar Paichai knew of the issue and had written an internal memo about security. Investors were then able to conceal the details.

According to the 9th Circuit, the plaintiff’s argument that Alphabet was silent because it wanted to “buy some time” and not be in the limelight that Meta Platform was receiving was accepted by the court. Facebook Inc (NASDAQ:). The reason why the stock was under threat is that Cambridge Analytica, Britain had accessed data from millions of users.