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    GOOGL   US02079K3059

ALPHABET INC.

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Alphabet : Google must face shareholder lawsuit claiming it hid security risks

06/16/2021 | 02:55pm EDT
FILE PHOTO: The brand logo of Alphabet Inc's Google is seen outside its office in Beijing

June 16 (Reuters) - A U.S. appeals court on Wednesday revived a lawsuit in which shareholders of Google parent Alphabet Inc accused the company of fraudulently concealing security vulnerabilities, including in its Google+ social network.

The 9th U.S. Circuit Court of Appeals in San Francisco said the lawsuit raised a "strong inference" that Alphabet's then-Chief Executive Larry Page and his successor, Sundar Pichai, knew about the bugs and an internal memo on security issues but intentionally concealed the information from investors.

Alphabet and its lawyers did not immediately respond to requests for comment on the 3-0 decision.

The lawsuit, led by the state of Rhode Island, followed an October 2018 Wall Street Journal article that said Google concealed the exposure of private data for nearly 500,000 Google+ users because it feared regulatory scrutiny and reputational harm.

Alphabet's share price fell more than 6% over the following three days, reducing the Mountain View, California-based company's market value by more than $50 billion.

Google ultimately admitted it had discovered the data exposure in March 2018, though there was no evidence of misuse, and decided to shut down the consumer version of Google+.

Its failure to disclose the vulnerabilities sooner drew bipartisan condemnation from Congress.

In Wednesday's decision, Circuit Judge Sandra Ikuta accepted the shareholders' argument that Alphabet stayed silent to "buy time," and avoid the spotlight that Facebook Inc was then under because Britain's Cambridge Analytica had harvested data from tens of millions of its users.

"As it turned out, Alphabet successfully bought itself about six months of time," Ikuta wrote. "The competing inference that Alphabet knew of this information but was merely negligent in not disclosing it is not plausible."

The case was returned to U.S. District Judge Jeffrey White in San Francisco, who had dismissed it in February 2020.

"We are grateful to have the opportunity to sit down with Mr. Pichai, Mr. Page and others to get the bottom of what they did," the plaintiffs' lawyer Jason Forge said in an interview.

The case is In re Alphabet Inc Securities Litigation, 9th U.S. Circuit Court of Appeals, No. 20-15638. (Reporting by Jonathan Stempel in New York; Editing by Steve Orlofsky)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 0.86% 2828.7 Delayed Quote.60.08%
FACEBOOK INC 1.40% 348.79 Delayed Quote.25.64%
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Financials (USD)
Sales 2021 251 B - -
Net income 2021 68 718 M - -
Net cash 2021 140 B - -
P/E ratio 2021 27,8x
Yield 2021 -
Capitalization 1 875 B 1 875 B -
EV / Sales 2021 6,92x
EV / Sales 2022 5,83x
Nbr of Employees 144 056
Free-Float 93,1%
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Mean consensus BUY
Number of Analysts 45
Last Close Price 2 805,67 $
Average target price 3 201,73 $
Spread / Average Target 14,1%
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Managers and Directors
Sundar Pichai Chief Executive Officer & Director
Ruth M. Porat Chief Financial Officer & Senior Vice President
John LeRoy Hennessy Chairman
Louis John Doerr Independent Director
Ann Mather Independent Director
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