Google must face shareholder lawsuit claiming it hid security risks

A federal appeals court on Wednesday revived a lawsuit in which shareholders of Google parent Alphabet accused Google of misleading them by concealing security vulnerabilities, including in its Google+ social network.

The 9th US Circuit Court of Appeals in San Francisco said the lawsuit raised a “strong inference” that Alphabet and its then-Chief Executive Larry Page knew about the bugs and an internal memo on security issues, and Alphabet intentionally withheld the information from its quarterly investor reports.

Alphabet’s stock price fell after an October 2018 Wall Street Journal article discussed the memo and said Google, fearing regulatory scrutiny and reputational harm, concealed how private data for hundreds of thousands of Google+ users had been exposed.

Google later admitted that the data had been exposed, and drew criticism from Congress for concealing security shortfalls.

Larry Page, then CEO of Google, holds a microphone at a 2012 news conference.
A federal court said a lawsuit brought by shareholders raised a “strong inference” that Alphabet and its then-Chief Executive Larry Page (shown) knew about an internal memo on security issues.
AFP via Getty Images

Neither Alphabet nor its lawyers immediately responded to requests for comment. Lawyers for shareholders including the state of Rhode Island did not immediately respond to similar requests.