Facebook Sees First Post-IPO Billion Dollar Privacy Lawsuit

A company is often most vulnerable around the time it goes public. That’s the time when it is targeted by others looking to make a quick buck and is slapped by lawsuits. For a company as high-profile as Facebook (NASDAQ:FB), which just went public in one of the biggest IPOs of all time, some lawsuits are just part of the game. We already saw how Yahoo (NASDAQ:YHOO) tried to bully Facebook right before its IPO with a patent lawsuit that yielded mixed results. Apparently, Facebook was sued today by some of its users in an amended class-action lawsuit which claims that it invaded their privacy by tracking their Internet usage even after they logged out of their accounts. ^[1]

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The lawsuit was filed in the Federal Court, San Jose, California, and combines 21 cases across the U.S. It is seeking up to $15 billion in damages, with the statutory damages calculated as per the U.S. Wiretap Act. We don’t expect this or any such lawsuit to reach the verdict stage, since most of them will either be thrown out or settled at a much lower amount.

This may be just the first of many. Brace yourself, Facebook, the lawsuits are coming.

We have a $89 billion Trefis valuation estimate for Facebook, which translates to a $33 Trefis price estimate based on its diluted share count. Facebook is the largest social network in the world with more than 900 million monthly active users. It competes with much smaller competitors like Google+, Twitter, LinkedIn (NYSE:LNKD) and Pinterest in the social networking space, and with Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT) and Yahoo (NASDAQ:YHOO) for online advertising dollars.

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1. Facebook Sued for $15 Billion in Suit Over User Tracking, Bloomberg [↩]