December 09, 2021

Warren Calls on DOJ and SEC to Open Criminal and Civil Investigations into Facebook's Potential Violations of U.S. Wire Fraud and Securities Laws

Text of Letter (PDF)

Washington, D.C. - United States Senator Elizabeth Warren (D-Mass.) sent a letter to United States Attorney General Merrick Garland and Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), urging the Department of Justice (DOJ) and SEC to open criminal and civil investigations into Facebook to determine if the company or its executives violated U.S. wire fraud and securities laws. Documentation in the public record, bolstered by whistleblower Frances Haugen’s recent revelations, suggests that Facebook may have misled investors, the SEC, its advertising customers, and the public about the “Potential Reach” of advertising on the platform. 

“At no point during the company’s alleged misrepresentations about Potential Reach—and their executives reported knowledge of the misrepresentations—did Facebook disclose the problems to their investors or the SEC. This may have been a deliberate choice, suggesting that Facebook and its executives could have violated federal law,” said Senator Warren.

Advertising is the cornerstone of Facebook’s business. The company “generate(s) substantially all of (its) revenue from selling advertising placements to marketers.” For example, in the third quarter of 2021, Facebook’s advertisements were responsible for over 97% of the company’s revenue, bringing in nearly $29 billion. “Potential Reach” has been a critical metric for measuring Facebook’s advertisements, one of two figures presented to advertisers about ad campaigns before purchase. But evidence suggests that Facebook has presented inflated “Potential Reach” figures to advertisers and that high-level executives at Facebook knew about the misrepresentations and refused to either correct the problem or disclose the issue to investors and the SEC. 

“Facebook is not above the law. The company’s executives cannot mislead investors, the SEC, its advertising customers, and the public about a core metric of its business model with impunity if such actions violate federal wire fraud or securities laws. Given the allegations of such misconduct, I urge the DOJ and SEC to immediately commence investigations into Facebook’s representations with respect to Potential Reach and, if you find that the company has in fact violated wire fraud or securities laws, to pursue all available criminal and civil sanctions as appropriate,” continued Senator Warren. 

Senator Warren has been a vocal leader on breaking up Big Tech and rooting out the anti-competitive practices of large companies.

  • This week, Senator Warren led a hearing and pushed for stronger antitrust laws to promote competition, privacy, and worker protections in the technology sector. 
  • In September 2021, Senator Warren sent a letter to the DOJ urging an investigation into an alleged 2018 bid-rigging scheme, called Jedi Blue, between Google and Facebook executives.