The more users, the more value your social medium platform has. But lying about this is not smart. A platform now pays a huge price for that!
Social media platforms do make money, but often do not even cover the costs. The great value lies in the number of users. This number represents the value of the company. And that can be huge. Large platforms are now listed and with more users the price rises. Likewise with Twitter. She claimed they had more users than they actually have.
‘Lying’ about social media users
A lie (almost) always comes out. Even at big tech companies. Twitter goes namely paying a good $809 million to settle a class action lawsuit. The reason for this was that prosecutors alleged that the company released misleading information about the number of active users. The case dates back to 2016 and the indictment states that the company withheld data. This showed that the network grew less quickly. Obviously with the aim to keep the value of the shares high.
settlement
The people who started the lawsuit say that Twitter started as early as 2015 to match user engagement with the number of users of the social medium platform. But the company did not disclose the number of active users. They did not do this because it could indicate that growth was slowing down, or even declining. That is always bad for a stock price.
Twitter does not view the settlement as an admission of guilt. They say the agreement contains “no finding of any fault, liability or misconduct.” Can’t help but have a lawyer wrote this. Anyway, the California court has to approve. If they do this, the company will pay. And that will hurt even Twitter.
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