2 3 Basil P. Fthenakis, Esq. (88399) CRITERION LAW 2225 E. Bayshore Road, Suite 200 Palo Alto, California 94303 Tel. (650) 352-8400 Fax. (650) 352-8408 bpf@criterionlaw .com 1/12/2018 4 5 6 7 8 9 10 11 12 Of counsel: David S. Godkin (admitted pro hac vice) James E. Kruzer (admitted pro hac vice) BIRNBAUM & GODKIN, LLP 280 Summer Street Boston, MA 0221 0 (617) 307-6100 godkin@birnbaumgodkin.com kruzer@birnbaumgodkin.com Attorneys for Plaintiff, SIX4THREE, LLC, a Delaware limited liability company 13 14 SUPERIOR COURT OF CALIFORNIA 15 COUNTY OF .SAN MATEO 16 17 18 19 20 21 22 23 24 25 26 ) ) ) ) Plaintiff, ) ) v. ) FACEBOOK, INC., a Delaware corporation; ) MARK ZUCKERBERG, an individual; ) CHRISTOPHER COX, an individual; ) ) JAVIER OLIVAN, an individual; SAMUEL LESSIN, an individual; ) MICHAEL VERNAL, an individual; ) ) IL YA SUKHAR, an individual; and DOES 1 through 50, inclusive, ) ) ) Defendants. SIX4THREE, LLC, a Delaware limited liability company, __________________________ ) Case No. CIV 533328 Assigned For All Purposes To Hon. MarieS. Weiner, Dept. 2 FIFTH AMENDED COMPLAINT OF PLAINTIFF, SIX4THREE, LLC, FOR INJUNCTION AND DAMAGES HEARING DATE: HEARING TIME: DEPARTMENT 2 (Complex Civil) JUDGE: Hon. MarieS. Weiner FILING DATE: April10, 2015 TRIAL DATE: April25, 2019 27 28 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 2 Plaintiff, Six4Three, LLC, alleges as follows: 1. This matter concerns a series of fraudulent and anti-competitive schemes designed 3 and effectuated by Facebook Chief Executive Officer Mark Zuckerberg ("Zuckerberg") with the 4 intention of deliberate! y misleading tens of thousands of software companies into developing 5 applications that generated substantial user growth and revenues for Facebook to help it grow 6 from 20 million active users in 2007 to over 1.6 billion by 2016. From May 2007 until at least 7 May 2015, Facebook executed an anti-competitive bait-and-switch scheme in which it engaged in 8 a campaign of misrepresentations, partial disclosures, and false enticements to Developers, like 9 PlaintiffSix4Three, LLC ("643"), to induce them to invest capital and resources in building 10 applications on Facebook's operating system ("Facebook Platform"). These misrepresentations 11 and partial disclosures, made in the form of official statements, announcements, videos and 12 policies announced by Zuckerberg and other Facebook executives and which Facebook posted on 13 its official website, as well as training sessions, conferences, hackathons and other events, 14 represented that Developers would have the opportunity to build a business and distribute their 15 applications organically; to compete on a level and fair playing field; and to access the data 16 offered in Facebook Platform on terms equal to all other companies and to Facebook itself. These 17 representations and partial disclosures around equal access and a level playing field were made 18 repeatedly over seven years in private and public settings, such as official press releases and 19 announcements on Facebook's website, Developer training sessions managed by Facebook 20 employees, and conferences, such as Facebook's annual Developer conference, F8. These 21 representations and partial disclosures were widely known in the software community, and 643 22 relied upon them when deciding whether to build a business on Facebook Platform. 23 2. These misrepresentations and partial disclosures fraudulently induced tens of 24 thousands of software companies, including 643 ("Developers"), to enter into identical adhesion 25 contracts with Facebook that placed a host of costly obligations and conditions on Developers in 26 exchange for access to Facebook Platform's social data (known as the "Graph API," "Open 27 Graph," or "Social Graph"). Access to the Graph API enabled Developers to build more useful 28 2 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 applications that generated increased user engagement and revenues for both Developers and 2 Facebook, as well as the opportunity for Developers to grow their applications organically due to 3 features Facebook offered that made Facebook users prospective customers of Developer 4 applications without requiring that the Developer purchase advertisements. Upon information and 5 belief, Facebook at no time provided access to the Graph API on an equal basis, but rather offered 6 large companies unfair competitive advantages and special access to data in exchange for 7 unrelated advertising purchases or other in-kind consideration at the expense of small or new 8 companies attempting to compete in Facebook's operating system. 9 3. Upon information and belief, at Zuckerberg's personal direction, Facebook used 10 its Platform as a weapon to gain leverage against competitors in a host of ways, threatening to 11 shut down access to publicly available data to any company that crossed Facebook's radar in a 12 wide range of circumstances, including threats to shut down data access: unless the company sold 13 to Facebook for a purchase price below their fair market value; unless the company purchased 14 large amounts of unrelated advertising with Facebook; unless the company transferred intellectual 15 property over to Facebook; or unless the company fed all of its data back to Facebook, where it 16 would then be available to the company's competitors, placing the company's business at great 17 risk. Upon information and belief, at the personal direction of Zuckerberg, Facebook took full 18 advantage of its incentives in serving as both the referee of and largest participant in one of the 19 world's largest software economies and, consequently made a series of partial disclosures and 20 misrepresentations that irreparably damaged tens of thousands of software applications and 21 businesses to unjustly enrich Facebook and its executives. 22 4. Further, upon information and belief, in 2012, Zuckerberg decided that it would be 23 in Facebook's best interest to no longer compete with many Developers and to shut down their 24 businesses by restricting their access to dozens of APis containing the most valuable Graph API 25 data, including the full friends list, friends permissions, newsfeed APis, and other data types 26 ("Graph API Data") upon which 643's business depended. Upon information and belief, working 27 in concert with other Facebook executives and employees and other large companies that were 28 3 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 close partners, Zuckerberg implemented a plan to deny access to many applications on Facebook 2 Platform on the primary or exclusive basis that these applications were competitive with current 3 or future products offered by Facebook or Facebook's close partners. Upon information and 4 belief, Defendants' anti-competitive conduct was undertaken in concert with other large 5 companies to oligopolize various software markets that Defendants continued to represent would 6 operate on fair and equal terms. 7 5. Upon information and belief, Zuckerberg and other Facebook executives and 8 employees actively, intentionally, recklessly, maliciously, oppressively, fraudulently and/or 9 negligently concealed this decision to restrict Graph API Data from Developers, the public and 10 internal employees while continuing to make misrepresentations and partial disclosures that 11 enticed Developers to make investments in Facebook Platform until at least April30, 2014 and, in 12 643's case, until January 20, 2015, notwithstanding that Facebook had a duty to disclose this 13 material fact that applications relying on Graph API Data would no longer function and that any 14 investments made by Developers in such applications after the middle of 2012 would be 15 irreparably damaged. 16 6. Facebook had a duty to disclose for a number of independent reasons, including: 17 its standard adhesion contract which it enters into with all users and Developers (the "SRR" or 18 "Agreement") and which specifies the commercial terms of a Developer's integration; the fact 19 that Facebook and Developers shared confidential and highly sensitive and private personal 20 information of consumers under the Agreement; the fact that Developers were required to share 21 their source code and other confidential intellectual property with Facebook at Facebook's 22 request under the Agreement; and the fact that Facebook made partial disclosures of fact to the 23 public and Developers regarding how it collects, stores, and transmits user data while omitting 24 material facts that would undermine and often contradict its partial disclosures. Facebook's duty 25 to disclose also arises out of the fact that the Agreement is the single most entered-into contract in 26 human history, with over 2 billion people and tens of millions ofbusinesses entrusting Facebook 27 28 4 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 to manage their confidential, personal and private information under the terms of the Agreement, 2 and therefore greatly implicates the public interest. 3 7. Upon information and belief, beginning in 2012 and continuing until2015, at 4 Zuckerberg's personal direction, Facebook executives instructed their subordinates to identify 5 categories of applications that would be considered competitive and to develop a plan to remove 6 access to critical data necessary for these applications to function, thereby eliminating 7 competition across entire categories of software applications, including photo-sharing 8 applications like the one 643 had begun building in December 2012, after Zuckerberg had already 9 decided to restrict access to the Graph API Data necessary for 643's technology to function. 10 8. Upon information and belief, Facebook actively, maliciously, oppressively and 11 fraudulently concealed the fact had that it would be restricting access to the Graph and continued 12 to entice Developers to make such investments for at least two years and potentially longer. Had 13 Facebook disclosed this fact within a reasonable time after making its decision, 643 would never 14 have made investments of capital and resources in Facebook Platform. Instead, Facebook unjustly 15 enriched itself through this fraudulent and anti-competitive conduct by enticing investments that 16 generated revenues for Facebook with full knowledge that those investments would be irreparably 17 damaged. 18 9. Further, upon information and belief, while actively suppressing this material 19 information and continuing to entice companies to invest in building applications for Facebook 20 Platform, Zuckerberg instructed certain Facebook executives to require or encourage their 21 subordinates to engage in a number of collusive and anti-competitive schemes with other large 22 companies. The schemes involved Facebook offering these companies unfair advantages via 23 special data access in various software markets in exchange for unrelated advertising payments 24 and/or other forms of cash or in-kind consideration that benefited Facebook. In doing so, 25 Facebook and these other large companies held hostage data that Facebook previously promised 26 would be available to all companies on neutral and equal terms to the systematic disadvantage of 27 small or new companies, including 643, that had been competing in Facebook's purportedly fair 28 5 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 and neutral operating system. Smaller companies like 643 could no longer participate in one of 2 the largest application and advertising economies globally, providing an immense advantage to 3 large companies that combined and conspired with Facebook to control Graph API data that 4 Facebook for years promised would be accessible on equal terms. Upon information and belief, 5 certain Facebook executives actively encouraged their subordinates to conspire with large 6 companies to offer them special access to data in exchange for unrelated cash payments in 7 advertising expenditures or other in-kind consideration of financial benefit to Facebook. Upon 8 information and belief, the conduct of the Facebook executives who participated in these schemes 9 was undertaken in combination and concert with other large companies who benefited from the 10 11 decision to restrict data access and eliminate competition in various software markets. 10. Finally, upon information and belief, beginning in 2013 and coalescing around 12 February 2014, Zuckerberg concocted and disseminated a completely fabricated narrative to mask 13 the deceptive and anti-competitive schemes that Zuckerberg and the other Facebook executives 14 had decided upon and begun implementing in 2012. This fabricated narrative centered on the fact 15 that the data being shut off to tens of thousands of smaller software companies was rarely used 16 and/or violated user trust and control over their data. Upon information and belief, these 17 fabricated reasons for shutting off data critical to the functioning of tens of thousands of 18 applications played no role in the actual decisions made by Zuckerberg and ratified and 19 implemented by other Facebook executives. 20 11. Further, once 643 entered into the Agreement with Facebook, Facebook had a duty 21 to disclose material information, including the fact that Zuckerberg had already decided to shut 22 down data access before 643 raised capital or entered into the Agreement with Facebook. 23 Facebook provided notices to 643 via email many dozens of times between December 2012 and 24 January 2015, and yet not a single communication from Facebook put 643 on notice ofthis 25 material information that had already by 2012 made it impossible for 643 to recoup its 26 investment. Upon information and belief, Facebook intentionally withheld and actively concealed 27 this information and only made partial disclosures of this information to which it had exclusive 28 6 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 knowledge in order to unjustly enrich Facebook and its executives, mitigate potential legal 2 liability and avoid negative press. Facebook's partial disclosures of material information 3 exclusively in its own possession fraudulently induced 643 to enter into contract with Facebook 4 and build its business on Facebook Platform. 5 12. Upon information and belief, Facebook, at Zuckerberg's personal direction, 6 deliberately suppressed material information and shared only partial information in Zuckerberg's 7 April 30, 2014 F8 announcement, causing further harm to 643, in a malicious and fraudulent 8 attempt to cover up the bait-and-switch schemes. For instance, Zuckerberg partially disclosed 9 that Facebook was removing the Graph API Data, but failed to share the material fact that the 10 data was not in fact being removed to everyone but was instead being privatized and made 11 available to certain companies at the great expense of all others. 12 13. Upon information and belief, Zuckerberg and certain other Facebook executives 13 conspired with and instructed their subordinates to conspire with other companies to engage in 14 fraudulent bait-and-switch schemes and repeatedly acted negligently, fraudulently and 15 maliciously in violation of California law to the detriment of consumers and tens of thousands of 16 small software companies, whose investments unjustly enriched Facebook, Zuckerberg and the 17 Facebook executives who conspired and actively participated in these schemes. The alleged 18 conduct of Zuckerberg and the other Facebook executives amounts to a classic bait-and-switch 19 tactic barred by California's Unfair Competition Law. 20 14. Around the time Zuckerberg made this decision to engage in the alleged fraudulent 21 and anti-competitive schemes, Facebook's stock price had dropped by more than half from its 22 initial IPO in May 2012, reaching a low of$37 billion in September 2012. Zuckerberg personally 23 lost approximately $10 billion in the period during which he decided to implement the fraudulent 24 and anti-competitive schemes. After Zuckerberg decided upon and implemented the alleged 25 fraudulent and anti-competitive schemes, the downward trajectory ofFacebook's stock reversed 26 course and began its rapid climb to a $400 billion market capitalization as of March 10, 2017, a 27 ten-fold increase from the low it had reached prior to Zuckerberg engaging in the alleged conduct. 28 7 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 Upon information and belief, Zuckerberg and certain other Facebook executives were greatly 2 enriched as a result of the alleged conduct on the order of millions or billions of dollars. The 3 alleged conduct was a substantial factor in the turnaround ofFacebook's stock price and the 4 growth of its business. 5 15. Upon information and belief, Mark Zuckerberg was the Chief Executive Officer of 6 Facebook, Inc. during the time over which the alleged conduct occurred and personally made the 7 decisions comprising the alleged conduct, including: (1) the decision to use Facebook Platform as 8 a weapon of leverage in various bait-and-switch schemes to unjustly enrich Facebook and certain 9 of its executives; (2) the decision to fraudulently, negligently, intentionally, maliciously and 10 oppressively misrepresent Facebook's plans regarding Facebook Platform before and after 11 Facebook had already decided to restrict Graph API Data around in 2012; (3) the decision to 12 actively conceal material information and make only partial disclosures of material facts to tens 13 of thousands of companies, including 643, for almost two years, and potentially longer, 14 notwithstanding that Facebook was under a duty to disclose other material facts that entirely 15 undermined and contradicted its partial disclosures; (4) the decision to conspire with large 16 companies to restrict access to data that Facebook promised for seven years would be available to 17 all companies on neutral and equal terms in exchange for large cash payments in advertising 18 and/or other in-kind consideration that greatly benefited Facebook; and (5) the decision in 2013 19 and early 2014 to concoct an entirely fabricated narrative in order to mask Facebook's true 20 intentions around its deceptive and anti-competitive schemes. 21 16. Upon information and belief, Christopher Cox was the VP Product and/or Chief 22 Product Officer of Facebook, Inc. during the period in question and was responsible for deciding 23 upon and implementing key components ofZuckerberg's fraudulent and anti-competitive 24 schemes. Cox actively approved, participated, ratified, directed and acquiesced in the conspiracies 25 and schemes alleged herein, including directing subordinates to increasingly expand the definition 26 of competitive applications whose access to data would be removed. 27 28 8 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 17. Upon information and belief, Javier Olivan was the Vice President of Growth of 2 Facebook, Inc. during the period in question and was responsible for deciding upon and 3 implementing key components ofZuckerberg's fraudulent and anti-competitive schemes. Olivan 4 actively approved, participated, ratified, directed and acquiesced in the conspiracies and schemes 5 alleged herein, including directing subordinates to increasingly expand the definition of 6 competitive applications whose access to data would be removed. 7 18. Upon information and belief, Samuel Lessin was the Director of Product and/or 8 Vice President of Product Management ofFacebook, Inc. during the period in question and was 9 responsible for deciding upon and implementing key components of Zuckerberg's fraudulent and 10 anti-competitive schemes. Lessin actively approved, participated, ratified, directed and 11 acquiesced in the conspiracies and schemes alleged herein, including directing subordinates to 12 increasingly expand the definition of competitive applications whose access to data would be 13 removed. 14 19. Upon information and belief, Michael Vernal was the Vice President of 15 Engineering of Facebook, Inc. during the period in question and was responsible for deciding 16 upon and implementing key components ofZuckerberg's fraudulent and anti-competitive 17 schemes. Vernal actively approved, participated, ratified, directed and acquiesced in the 18 conspiracies and schemes alleged herein, including architecting and overseeing the 19 implementation plan to cause tens of thousands of software applications to cease functioning in 20 order to oligopolize various software markets for the benefit ofFacebook and Facebook's close 21 partners. 22 20. Upon information and belief, Ilya Sukhar was the Vice President of Developer 23 Products ofFacebook, Inc. during the period in question and was responsible for deciding upon 24 and implementing key components of Zuckerberg's fraudulent and anti-competitive schemes. 25 Sukhar actively approved, participated, ratified, directed and acquiesced in the conspiracies and 26 schemes alleged herein. 27 28 9 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 17. Upon information and belief, Javier Olivan was the Vice President of Growth of 2 Facebook, Inc. during the period in question and was responsible for deciding upon and 3 implementing key components ofZuckerberg's fraudulent and anti-competitive schemes. Olivan 4 actively approved, participated, ratified, directed and acquiesced in the conspiracies and schemes 5 alleged herein, including directing subordinates to increasingly expand the definition of 6 competitive applications whose access to data would be removed. 7 18. Upon information and belief, Samuel Lessin was the Director of Product and/or 8 Vice President of Product Management ofFacebook, Inc. during the period in question and was 9 responsible for deciding upon and implementing key components of Zuckerberg's fraudulent and 10 anti-competitive schemes. Lessin actively approved, participated, ratified, directed and 11 acquiesced in the conspiracies and schemes alleged herein, including directing subordinates to 12 increasingly expand the definition of competitive applications whose access to data would be 13 removed. 14 19. Upon information and belief, Michael Vernal was the Vice President of 15 Engineering of Facebook, Inc. during the period in question and was responsible for deciding 16 upon and implementing key components ofZuckerberg's fraudulent and anti-competitive 17 schemes. Vernal actively approved, participated, ratified, directed and acquiesced in the 18 conspiracies and schemes alleged herein, including architecting and overseeing the 19 implementation plan to cause tens of thousands of software applications to cease functioning in 20 order to oligopolize various software markets for the benefit ofFacebook and Facebook's close 21 partners. 22 20. Upon information and belief, Ilya Sukhar was the Vice President of Developer 23 Products ofFacebook, Inc. during the period in question and was responsible for deciding upon 24 and implementing key components of Zuckerberg's fraudulent and anti-competitive schemes. 25 Sukhar actively approved, participated, ratified, directed and acquiesced in the conspiracies and 26 schemes alleged herein. 27 28 9 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages wrongful and malicious conduct precisely in order to damage (and with full knowledge of the 2 proximate damage to) these 40,000 or more software applications, including Plaintiffs 3 application ("App"), to fulfill his primary goals of removing competitive threats to Facebook's 4 planned products and propping up Facebook's mobile advertising business by holding software 5 companies hostage. Upon information and belief, Zuckerberg was aware that these 40,000 or 6 more software applications, including Plaintiffs App, had contracts with their end users that 7 would be breached or otherwise interrupted by Zuckerberg' s intentional, wrongful, malicious, 8 oppressive, fraudulent and negligent conduct because the adhesion contract software companies, 9 including Plaintiff, entered into with Facebook required them to maintain such contracts with 10 11 their end users. 24. Upon information and belief, Defendant Christopher Cox was the VP Product 12 and/or Chief Product Officer ofFacebook, Inc. during the period in question and was responsible 13 for deciding upon and implementing key components of Zuckerberg' s fraudulent and anti- 14 competitive schemes. Cox actively approved, participated, ratified, directed and acquiesced in the 15 conspiracies and schemes alleged herein, including directing subordinates to increasingly expand 16 the definition of competitive applications whose access to data would be removed. Upon 17 information and belief, Cox made and directed Facebook employees to make false statements and 18 to maliciously suppress material facts from at least 2009 through 2015 regarding Facebook's 19 management of Facebook Platform with the intention of inducing investment from software 20 companies to build applications on Facebook Platform notwithstanding that Cox knew these 21 investments would be irreparably damaged. Upon information and belief, Cox was aware these 22 statements were false at the time they were made and that the facts suppressed would have 23 materially qualified the partial disclosures he authorized or personally made. Upon information 24 and belief, Cox engaged in this wrongful and malicious conduct precisely in order to damage (and 25 with full knowledge of the proximate damage to) these 40,000 or more software applications, 26 including Plaintiffs App, to fulfill his primary goals of removing competitive threats to 27 Facebook's planned products and propping up Facebook's mobile advertising business by holding 28 11 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 software companies hostage. Upon information and belief, Cox was aware that these 40,000 or 2 more software applications, including Plaintiffs App, had contracts with their end users that 3 would be breached or otherwise interrupted by Cox's intentional, wrongful, malicious, 4 oppressive, fraudulent and negligent conduct because the adhesion contract software companies, 5 including Plaintiff, entered into with Facebook required them to maintain such contracts with 6 their end users. 7 25. Upon information and belief, Defendant Javier Olivan was the Vice President of 8 Growth ofFacebook, Inc. during the period in question and was responsible for deciding upon 9 and implementing key components of Zuckerberg' s fraudulent and anti -competitive schemes. 10 Olivan actively approved, participated, ratified, directed and acquiesced in the conspiracies and 11 schemes alleged herein, including directing subordinates to increasingly expand the definition of 12 competitive applications whose access to data would be removed. Upon information and belief, 13 Olivan repeatedly required the Facebook Platform team to shut down applications on the 14 exclusive basis that they were competitive with Facebook and further required the Platform team 15 to re-architect the APis Facebook made available to make it more difficult for other software 16 companies to compete with Facebook on a level playing field, including removal of the friends 17 list API, friends permissions APis, newsfeed APis, user ID APis, and others. Upon information 18 and belief, Olivan directed numerous projects at Facebook that intentionally violated user privacy 19 in order to give Facebook' s products an unfair competitive advantage relative to other Platform 20 apps. Upon information and belief, Olivan made and directed Facebook employees to make false 21 statements and to maliciously suppress material facts from at least 2009 through 2015 regarding 22 Facebook's management ofFacebook Platform with the intention of inducing investment from 23 software companies to build applications on Facebook Platform notwithstanding that Olivan 24 knew these investments would be irreparably damaged. Upon information and belief, Olivan was 25 aware these statements were false at the time they were made and that the facts suppressed would 26 have materially qualified the partial disclosures he authorized or personally made. Upon 27 information and belief, Olivan engaged in this wrongful and malicious conduct precisely in order 28 12 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 to damage (and with full knowledge ofthe proximate damage to) these 40,000 software 2 applications, including Plaintiffs App, to fulfill his primary goals of removing competitive 3 threats to Facebook's planned products and propping up Facebook's mobile advertising business 4 by holding software companies hostage. Upon information and belief, Olivan was aware that 5 these 40,000 or more software applications, including Plaintiffs App, had contracts with their 6 end users that would be breached or otherwise interrupted by Olivan's intentional, wrongful, 7 malicious, oppressive, fraudulent and negligent conduct because the adhesion contract software 8 companies, including Plaintiff, entered into with Facebook required them to maintain such 9 contracts with their end users. Upon information and belief, Zuckerberg directed Olivan (along 10 with Lessin) to oversee Vernal's Platform team to make sure Facebook properly executed its goal 11 of removing thousands of competitive threats by privatizing Graph API. 12 26. Upon information and belief, Defendant Samuel Lessin was the Director of 13 Product and/or Vice President of Product Management ofFacebook, Inc. during the period in 14 question and was responsible for deciding upon and implementing key components of 15 Zuckerberg's fraudulent and anti-competitive schemes. Lessin actively approved, participated, 16 ratified, directed and acquiesced in the conspiracies and schemes alleged herein, including 17 directing subordinates to increasingly expand the definition of competitive applications whose 18 access to data would be removed. Upon information and belief, in the summer and fall of 2012, 19 Lessin worked with Zuckerberg and other Facebook executives like Sheryl Sandberg, Andrew 20 Bosworth and Dan Rose to weaponize developers' reliance on Facebook Platform by threatening 21 to break many software applications unless the developer made significant purchases in unrelated 22 advertising using Facebook's new mobile advertising product. Upon information and belief, 23 Lessin was instrumental in developing the plan whereby Facebook approached companies to buy 24 advertising under the threat that if they did not do so, Facebook would break their applications by 25 removing access to public Platform data. Upon information and belief, Lessin made and directed 26 Facebook employees to make false statements and to maliciously suppress material facts from at 27 least 2009 through 2015 regarding Facebook's management ofFacebook Platform with the 28 13 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 intention of inducing investment from software companies to build applications on Facebook 2 Platform notwithstanding that Lessin knew these investments would be irreparably damaged. 3 Upon information and belief, Lessin was aware these statements were false at the time they were 4 made and that the facts suppressed would have materially qualified the partial disclosures he 5 authorized or personally made. Upon information and belief, Lessin engaged in this wrongful and 6 malicious conduct precisely in order to damage (and with full knowledge of the proximate 7 damage to) these 40,000 software applications, including Plaintiffs App, to fulfill his primary 8 goals of removing competitive threats to Facebook's planned products and propping up 9 Facebook's mobile advertising business by holding software companies hostage. Upon 10 information and belief, Lessin was aware that these 40,000 or more software applications, 11 including Plaintiffs App, had contracts with their end users that would be breached or otherwise 12 interrupted by Lessin's intentional, wrongful, malicious, oppressive, fraudulent and negligent 13 conduct because the adhesion contract software companies, including Plaintiff, entered into with 14 Facebook required them to maintain such contracts with their end users. Upon information and 15 belief, Zuckerberg directed Lessin (along with Olivan) to oversee Vernal's Platform team to make 16 sure Facebook properly executed its goal of propping up its mobile advertising business by 17 privatizing Graph API. 18 27. Upon information and belief, Defendant Michael Vernal was the Vice President of 19 Engineering of Facebook, Inc. during the period in question and was charged with direct 20 oversight ofFacebook Platform. As such, Vernal was responsible for deciding upon and 21 implementing key components of Zuckerberg' s fraudulent and anti-competitive schemes. Vernal 22 actively approved, participated, ratified, directed and acquiesced in the conspiracies and schemes 23 alleged herein, including architecting and overseeing the implementation plan to cause tens of 24 thousands of software applications to cease functioning in order to oligopolize various software 25 markets for the benefit ofFacebook and Facebook's close partners. Upon information and belief, 26 Zuckerberg directed Vernal to be the front man internally for this bait and switch scheme with 27 full responsibility for its design and implementation such that many employees at Facebook were 28 14 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 for years under the impression that the API restrictions were Vernal's idea. Upon information and 2 belief, Vernal made and directed Facebook employees to make false statements and to 3 maliciously suppress material facts from at least 2009 through 2015 regarding Facebook's 4 management of Facebook Platform with the intention of inducing investment from software 5 companies to build applications on Facebook Platform notwithstanding that Vernal knew these 6 investments would be irreparably damaged. Upon information and belief, Vernal was aware these 7 statements were false at the time they were made and that the facts suppressed would have 8 materially qualified the partial disclosures he authorized or personally made. Upon information 9 and belief, Vernal engaged in this wrongful and malicious conduct precisely in order to damage 10 (and with full knowledge of the proximate damage to) these 40,000 software applications, 11 including Plaintiffs App, to fulfill his primary goals of removing competitive threats to 12 Facebook's planned products and propping up Facebook's mobile advertising business by holding 13 software companies hostage. Upon information and belief, Vernal was aware that these 40,000 or 14 more software applications, including Plaintiffs App, had contracts with their end users that 15 would be breached or otherwise interrupted by Vernal's intentional, wrongful, malicious, 16 oppressive, fraudulent and negligent conduct because the adhesion contract software companies, 17 including Plaintiff, entered into with Facebook required them to maintain such contracts with 18 their end users. 19 28. Upon information and belief, Defendant Ilya Sukhar was the Vice President of 20 Developer Products ofFacebook, Inc. during the period in question and was responsible for 21 deciding upon and implementing key components ofZuckerberg's fraudulent and anti- 22 competitive schemes. Sukhar actively approved, participated, ratified, directed and acquiesced in 23 the conspiracies and schemes alleged herein, including architecting and overseeing the plan to 24 achieve support among Facebook employees and Developers around the fabricated narrative 25 Zuckerberg manufactured to conceal his various anti-competitive schemes. Upon information and 26 belief, Zuckerberg directed Sukhar in the second half of2013 and early 2014 to serve as the front 27 man externally for the bait and switch scheme in light of Sukhar's respected reputation among the 28 15 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 software developer community. Upon information and belief, Sukhar made and directed 2 Facebook employees to make false statements and to maliciously suppress material facts from at 3 least 2013 through 2015 regarding Facebook's management ofFacebook Platform with the 4 intention of inducing investment from software companies to build applications on Facebook 5 Platform notwithstanding that Sukhar knew these investments would be irreparably damaged. 6 Upon information and belief, Sukhar was aware these statements were false at the time they were 7 made and that the facts suppressed would have materially qualified the partial disclosures he 8 authorized or personally made. Upon information and belief, Sukhar engaged in this wrongful and 9 malicious conduct precisely in order to damage (and with full knowledge of the proximate 10 damage to) these 40,000 software applications, including Plaintiffs App, to fulfill his primary 11 goals of removing competitive threats to Facebook's planned products and propping up 12 Facebook's mobile advertising business by holding software companies hostage. Upon 13 information and belief, Sukhar was aware that these 40,000 or more software applications, 14 including Plaintiffs App, had contracts with their end users that would be breached or otherwise 15 interrupted by Sukhar's intentional, wrongful, malicious, oppressive, fraudulent and negligent 16 conduct because the adhesion contract software companies, including Plaintiff, entered into with 17 Facebook required them to maintain such contracts with their end users. Upon information and 18 belief, Sukhar worked with Zuckerberg directly to concoct a fabricated narrative around user trust 19 in late 2013 and early 2014 that intentionally and maliciously concealed critical facts related to 20 Facebook's anti-competitive data restrictions in order to avoid legal and public relations 21 ramifications for Zuckerberg's bait and switch scheme. 22 29. Plaintiff is ignorant of the true names and capacities of the Defendants sued herein 23 as Does 1 through 50, inclusive, and each of them, and therefore sues said Defendants by such 24 fictitious names. Plaintiff will amend this complaint when the true names and capacities of said 25 Defendants have been ascertained. Plaintiff is informed and believes and thereon alleges, that 26 Defendants Does 1 through 50, inclusive, and each of them, are legally responsible in some 27 manner for the events and happenings referred to herein and proximately caused or contributed to 28 16 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 the injuries to Plaintiff as hereinafter alleged. Wherever in this complaint any Defendant is the 2 subject of any charging allegation by Plaintiff, it shall be deemed that said Defendants Does 1 3 through 50, inclusive, and each of them, are likewise the subjects of said charging allegation. 30. 4 Plaintiff is informed and believes, and thereon alleges, that at all times herein 5 mentioned, each of the Defendants was the agent and employee of each of the remaining 6 Defendants and, in doing the things herein alleged, was acting within the course and scope of said 7 agency and employment. 8 FACTS 31. 9 643 is an image pattern recognition and media sharing (e.g. photo, video) startup 10 company. 643's principals are users ofFacebook and subject to Facebook's Statement of Rights 11 and Responsibilities ("SRR"). 32. 12 13 share information with their friends and family. 33. 14 15 Facebook operates a social networking service that enables users to connect and Facebook refers to the network of relationships among its users and the associated data elements as the "Graph," "Open Graph" or the "Social Graph." 34. 16 The Facebook Developer Platform (also called "Facebook Platform") enables 17 Developers to make applications and other services available to Facebook users using data from 18 the Graph via the Graph API, similar to how software companies can build applications on 19 Windows or Mac operating systems except with the advantage ofusing Facebook's inherently 20 social data. The Facebook Platform is one of the world's largest software economies globally and 21 the economic activity it generates is larger than the GDP of many sovereign nations. 22 I. 23 24 ZUCKERBERG LAUNCHES FACEBOOK PLATFORM IN MAY 2007, PROMISING EQUAL ACCESS AND A LEVEL PLAYING FIELD TO ALL MARKET PARTICIPANTS 35. At 3PM PDT on May 24,2007, Mark Zuckerberg, Facebook Founder and CEO, 25 made a self-described revolutionary announcement to a crowded room of software developers in 26 San Francisco. Zuckerberg announced the launch of Facebook Platform, which he had described 27 weeks earlier in an interview with Fortune magazine as "the most powerful distribution 28 17 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 mechanism that's been created in a generation."' He went on in the Fortune interview to describe 2 the motivation for creating Facebook Platform in this way: "We want to make Facebo k into 3 something of an operating system so you can nm fuiJ applications," specifying that this 4 development was the internet-equivalent to what Microsoft did with Windows, which allowed 5 other developers to build applications for PCs. (See 6 http :II archive. fortune.com/2007 105/24/technologylfacebook. fortune/index.htm.) 36. 7 In fact, Zuckerberg's first demonstration ofFacebook Platform was purportedly to 8 Bill Gates in early May 2007. Microsoft and Facebook had reached an agreement for Microsoft to 9 purchase banner ads on Facebook in which Microsoft had guaranteed Facebook a minimum of 10 $100 million per year through 2011. Facebook Platform was positioned by Facebook to Microsoft 11 as the driving force behind meeting Facebook's ambitious growth metrics. At the time of this 12 announcement, Facebook had just exceeded 20 million active users and had raised only $37.7 13 million in venture capital investment. Even at this modest point in Facebook's growth, its photo 14 sharing application was the largest photo application on the Internet, and according to Facebook's 15 own internal statistics, drew more than twice the traffic of the next three photo sites combined at 16 the time ofthe May 24, 2007 announcement ofFacebook Platform. 37. 17 Zuckerberg announced that the three key elements ofFacebook Platform were 18 'de p integration, mass distribution. and new opportunity." These were three key themes he 19 would repeat throughout the day and for years to come in numerous public conversations and 20 presentations. (See https:lI gigaom.com/2007105/241live-at-the-face book-launch/.) 38. 21 Thus, Zuckerberg made three distinct representations of fact: (1) Developers 22 would have deep integration with Facebook's social graph; (2) Developers would have 23 Facebook's support in achieving mass distribution of their applications; and (3) Developers 24 would have an opportunity to build a business on Facebook. 25 26 1 27 28 In the quoted text here and elsewhere in the Fourth Amended Complaint, representations by Facebook or its employees have been underlined for emphasis. 18 Case No. CIV 5333281Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 39. By 8PM that evening, these key elements were memorialized on Facebook's 2 website with the official announcement "Facebook Platform Launches", stating "You can now 3 build applications that have the same access to integration into the social graph as Facebook 4 appJications, such as photos, notes, and events .... The power of mass distribution is now in your 5 hands. You can gain distribution for your applications through the social graph like never before. 6 Applications can be virall y engineered to reach millions ofFacebook users 7 through the profile, news feed, and mini-feed . ... With access to deep integration into the site, and 8 mass distribution through the social graph comes a new opportunity for you to build a business 9 with your application. You are free to monetize your canvas pages tlu-ough advertising or other qu~kly and efficiently 10 transactions that you control." (See Facebook Platform Launches, 11 http://web.archi ve.org/web/20070706002021 /http:/I developers. facebook.com/news. php ?blog= 1& 12 story=21). 13 40. Facebook's announcement thus represented that (1) Developers have the "same 14 access to integration" for applications such as photos and notes as Facebook employees; 15 (2) Developers are able to distribute applications through Facebook Platform; and (3) Developers 16 are able to monetize applications through Facebook Platform. 17 41. Zuckerberg went on to say: "The social graph is our base, and we' ve built a 18 framework that is completely optimized for developing social applications within our 19 environment. ... We believe that there is more value fm everyone in letting other people develop 20 applications on top of the base we've built than we could ever possibly provide on our own .... 21 This is good for us because if developers build great applications then they're providing a service 22 to our users and strengthening the social graph .... This is a big opportunity. We provide the 23 integration and distribution and developers provide the applications. We help users share more 24 information and together we benefit." 25 42. Zuckerberg thus represented that Facebook is committed long term to serving as a 26 platform that enables Developers to build applications on a level playing field because it is a big 27 opportunity for everyone. 28 19 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 43. Zuckerberg then announced that Facebook had been working with over 70 2 developers in anticipation of the launch ofFacebook Platform, including Amazon, Forbes, iLike, 3 Lending Club, Microsoft, Obama for America, Photobucket, Red Bull, Twitter, Uber, Virgin 4 Mobile USA, Warner Bros, Washington Post and many others. (See live blog ofF8 event from 5 leading Internet blogger, Mashable, at http:l/mashable.com/2007/05/24/facebook-£8- 6 live/#CitbgFtPV5q0.) 7 44. Around 4PM during Zuckerberg's presentation, he announced 5 case studies from 8 these early developer partners aimed at showing how easy it was for all developers to integrate 9 with Facebook Platform. Zuckerberg distributed case studies from Red Bull, Box.net, Lending 10 Club, Microsoft and Slide. com. Zuckerberg continued to emphasize during this public, annual 11 keynote to Developers that Facebook Platform is the single biggest and most revolutionary 12 change to Facebook since its inception, stating: 'Every once in a while a platfmm comes along 13 that allows people to build a completely new application-sometimes even start new industries." 14 (See https://gigaom.com/2007/05/24/live-at-the-facebook-launch/.) 15 45. GigaOm, a leading Internet blogger, live blogged the event and further quoted 16 Zuckerberg as saying: "With photo-sharing, he explained, 'it's not just the photos that spread, it's 17 the whole photos application'. Third-party applications won't be treated like second-class citizens 18 on Facebook, he says; users can add them to their profiles and drag them and drop them to their 19 content. Applications can use Flash, J avaScript, and Silverlight if a user approves them. Outside 20 applications can issue unlimited notifications to users, and fit into the Facebook environment by 21 accessing a 'friend selector' that spits out each user's connections. Now Zuckerberg says you can 22 serve ads on your app pages and keep all the revenue, sell them yourselves or use a network, and 23 process transactions within the site, keeping all the revenue without diverting users off 24 Facebook." (See https://gigaom.com/2007/05/24/live-at-the-facebook-launch/.) 25 26 46. Zuckerberg thus represented that (1) developer applications won't be "second class citizens"; (2) developer applications can access a user's connections and related user data made 27 28 20 Case No. CIV 533328/P1aintiffs Fifth Amended Complaint for Injunction and Damages 1 available in the social graph; and (3) developer applications can sell ads through the Facebook 2 Platform. 3 47. This grandiose language from Zuckerberg sparked substantial questions from the 4 Developer community so by 4:20p.m. pacific (1 hour and 20 minutes after the keynote had 5 started), Facebook released the official "Facebook Platform F AQ", which was being circulated 6 across the Internet and available on Facebook's official website to educate developers on this 7 announcement. The Facebook Platform F AQ was an official document released by Facebook to 8 address material facts that enabled Developers to make an informed decision around whether to 9 invest capital and resources in building applications for Facebook Platform (See Exhibit 1, 10 Facebook F8 and Platform FAQ.) The Facebook Platform FAQ states, among other things: 11 What is Facebook Platform? Facebook Platform is a development system that enables 12 companies and developers to build applications for the Facebook website, where all of 13 Facebook's 24 million active users can interact with them. Facebook Platform offers deep 14 integration in the Facebook website, distribution through the social graph and an 15 opporturuty to build a bu iness. 16 *** 17 What's new in Facebook Platform? We've been adding functionality since Facebook 18 Platform first shipped in beta in August 2006. With the latest evolution ofFacebook 19 Platform however, third-party developers can now create applications on the Facebook 20 site with the same level of integration as applications built by internal Facebook 21 developers. Now developers everywhere have the ability to create Facebook applications 22 that deeply integrate into the Facebook site, as well as the potential for mass distribution 23 through the social graph and new business opportunities. 24 *** 25 Why did Facebook launch Facebook Platform? Our engineers have created great 26 applications for Facebook, but we recognized that third-party developers can help us make 27 Facebook an even more powerful social utility. Facebook Platform gives developers 28 21 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 everywhere the tools to create applications that we just wouldn't have the resources to 2 build in-house, and those applications make Facebook an even better way for our users to 3 exchange information. Developers also benefit from the Facebook Platform a it gives 4 them the potential to broadly distribute their applications and even build new business 5 opp rtun iti es. 6 *** 7 What kinds of applications can be built on Facebook Platform? The kinds of 8 applications developers can build on Facebook Platfonn are lintited only by their 9 imaginations. Because applications are based on the Facebook social graph they can be 10 more relevant to users, keeping people in touch with what and whom they care about. 11 We've already seen a variety of applications built by our developer partners, including 12 those for sharing media files, book reviews, slideshows and more. Some of the 13 possibilities ofFacebook applications are illustrated in the Facebook Platform Application 14 Directory, available at http://facebook.com/apps. 15 *** 16 Are there any restrictions on what developers can build? Developers are encouraged 17 to exercise their reativity when building applications. Of course, all applications are 18 subj ect to the Terms of Service that every developer agrees to, which include basic 19 requirements such as not storing any sensitive user information, not creating any offensive 20 or illegal applications, and no building anything that phi shes or spam users. And users 21 will always have the power to report any applications that compromise Facebook's trusted 22 environment, keeping our users' information safe. 23 *** 24 How will Facebook deal with applications that compete with one another or even 25 compete with Facebook-built applications? We welcome developer with competing 26 applications, including developers whose applications might compete with Facebook-built 27 applications. Many applications are likely to offer similar features. We ve designed 28 22 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Facebook Platform s that applications from thjrd-party devel pers are on a level playin g 2 field with applications built by Facebook. Ultimately, our users will decide which 3 applications they find most useful, and it is these applications that will become the most 4 p pular. 5 *** 6 Can Facebook applications include ads? We want to enable developers to build a 7 business on their Facebook application , so we're giving developers the freedom to 8 monetize their applicati ns as they like. Developers can include advertising on their 9 applications' canvas pages, though no advertising will be allowed within the application 10 boxes that appear within user profiles. 11 *** 12 Are you going to share revenue with developers? While revenue sharing is not 13 available at launch, we are looking into ways to share advertising revenue with 14 developers. The version of Facebook Pl atform already lets developers monetize their 15 applications as they like, whether they choose to offer it for free or to build a business on 16 their application. 17 48. 18 In sum, these representations by Facebook reflected the following explicit promises to Developers: 19 a. Developers would have "deep integration"; 20 b. Developers would have access to the "social graph"; 21 22 23 24 c. Developers would have "an opportunity to build a business." d. Developers would have the same level of integration and ability to develop apps in the same manner as internal Facebook employees; e. Facebook will provide adequate tools necessary for Developers to build their applications; 25 26 27 28 £ Facebook will help Developers achieve broad distribution of their applications; g. so long as applications abide by Facebook's Terms of Service, Developer Policies and other binding commitments Developers make in order to participate in 23 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages Facebook Platform, Facebook will remain neutral as to the applications built on its operating system; 1 2 h. any application that does not violate its agreement with Facebook, phish or spam users, contain offensive material, or break the law shall be accepted in Facebook Platform; 3 4 1. competing applications are welcome on Facebook's operating system; J. Facebook will remain neutral among competing applications; 5 6 k. Facebook will remain neutral among its own applications and those of developers regardless of whether they compete or not; 7 8 I. 9 applications similar in purpose and content will be allowed to compete on a "level playing field" m. "level playing field" constitutes a definition of fairness in market competition, and that definition of fairness means that ultimately users will decide which applications win the market, not Facebook or other third parties; 10 11 12 n. implicit in this definition of fairness based on user decision is the necessary consequence that Facebook shall take no actions to promote its own applications or preferred applications from companies that have a special relationship with Facebook in order to slant this playing field in a manner that makes it less likely for users ultimately to decide the winner; 13 14 15 16 o. Facebook will enable Developers to build businesses on their operating system by directly monetizing their applications on Facebook; 17 p. Developers will be able to sell ads on their application pages; and 18 q. Developers will have a choice as to whether they monetize their application on Facebook's operating system. 19 20 21 22 23 24 25 26 27 28 II. DEVELOPERS RESPONDED ENTHUSIASTICALLY TO THE LAUNCH OF FACEBOOK PLATFORM 49. The blogging community went into an immediate and prolonged frenzy over this announcement. Paul B. Allen, founder of Ancestry.com and well-known Internet blogger, summed up the general sentiment expressed by countless bloggers when he wrote that same day, "I saw history in the making today ... I was lucky enough to be in San Francisco for the Facebook F8 Platform launch event. This announcement was at least an 8.0 on the Richter scale. It was a whopper. ... A huge new opportunity was presented to the few hundred people in the room, including 65 companies that have spent the last few weeks developing applications for the launch 24 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 ofFacebook Platform. Facebook is inviting anyone to develop applications for their users on top 2 of what Mark calls their "social graph"- the core of their service which basically keeps track of 3 real people and their real connections to each other. ... [Facebook's] growth will be dramatically 4 accelerated by the Platform announcement. If Facebook is adding 100,000 new users per day with 5 its own few simple applications (like its photo sharing, a very simple service that has given 6 Facebook twice as many photos as all other photo sharing sites combined), what will happen 7 when thousands or tens of thousands of developers start building apps in Facebook and marketing 8 them to more users? Facebook will reach 50 million, then 100 million, then 200 million users, and 9 beyond. Rather than continue to try to develop features within its own proprietary, closed 10 network, basically keeping all of its users to itself. .. Facebook intuitively gets the concepts that 11 are so brilliantly discussed in Wikinomics (which are so non-intuitive to old school business 12 types), and has chosen to open up its network for all to participate in ... Application developers 13 can now have access to core Facebook features, such as user profiles and user connections, and 14 even publishing to the News Feed, all with the control and permission ofFacebook users ... When 15 Facebook has 100 million users, in the not too distant future, having the ability to develop an App 16 in their system will almost be like being able to get a link on Google's own home page." (See 17 http://www.paulallen.net/prediction-facebook-will-be-the-largest-social-network-in-the-world/.) 18 50. To Developers, Facebook Platform represented not just an entirely new operating 19 system, but an economy that could reorganize the entire Internet (potentially replacing Google as 20 the dominant form of organizing the world wide web). The sentiment among Developers, as 21 widely held throughout the industry and reported by popular sites like TechCrunch and the Wall 22 Street Journal, was that if you aren't building for Facebook Platform, you will be left behind 23 (http ://techcrunch.com/2007/05/24/facebook-launches-facebook-platform-they-are-the-anti- 24 myspace/) (http://www.wsj.com/public/article/SB117971397890009177- 25 wjdKPmjAqS _9ZZbwiRp _ CoSqvwQ_20070620.html). 26 51. Facebook and the Developers who were selected to participate in the private beta 27 ofFacebook Platform quickly set out to make Developers comfortable with this grandiose vision 28 25 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 available in the social graph; and (3) developer applications can sell ads through the Facebook 2 Platform. 3 47. This grandiose language from Zuckerberg sparked substantial questions from the 4 Developer community so by 4:20p.m. pacific (1 hour and 20 minutes after the keynote had 5 started), Facebook released the official "Facebook Platform F AQ", which was being circulated 6 across the Internet and available on Facebook's official website to educate developers on this 7 announcement. The Facebook Platform F AQ was an official document released by Facebook to 8 address material facts that enabled Developers to make an informed decision around whether to 9 invest capital and resources in building applications for Facebook Platform (See Exhibit 1, 10 Facebook F8 and Platform FAQ.) The Facebook Platform FAQ states, among other things: 11 What is Facebook Platform? Facebook Platform is a development system that enables 12 companies and developers to build applications for the Facebook website, where all of 13 Facebook's 24 million active users can interact with them. Facebook Platform offers deep 14 integration in the Facebook website, distribution through the social graph and an 15 opporturuty to build a bu iness. 16 *** 17 What's new in Facebook Platform? We've been adding functionality since Facebook 18 Platform first shipped in beta in August 2006. With the latest evolution ofFacebook 19 Platform however, third-party developers can now create applications on the Facebook 20 site with the same level of integration as applications built by internal Facebook 21 developers. Now developers everywhere have the ability to create Facebook applications 22 that deeply integrate into the Facebook site, as well as the potential for mass distribution 23 through the social graph and new business opportunities. 24 *** 25 Why did Facebook launch Facebook Platform? Our engineers have created great 26 applications for Facebook, but we recognized that third-party developers can help us make 27 Facebook an even more powerful social utility. Facebook Platform gives developers 28 21 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 and most our company was pretty skeptical. But he makes these calls so we followed him. 2 As to what stood out, it's a combination of three things: (1) the technology itself- 3 Facebook Platform, like any platform, offers the developer building blocks to build apps 4 faster than they could if they were starting from scratch, and to tap into a rich source of 5 data & capabilities that would never otherwise be available; (2) the potential for viral 6 spread- due to the way the Facebook news feed works, an app can spread across the 7 community entirely by viral spread, as friends get notified when one person adopts 8 it. .. this essentially bypasses the idea of trying to make your app 'viral' as a standalone, 9 because Facebook is itself naturally viral; (3) the rhetoric from the Facebook management 10 team, starting from the CEO himself, made it clear that they have a long-term 11 commitment to a level playing field. For example, they absolutely refused to give us any 12 special advantage, insisting that the market needs to see a level playing field ... we offered 13 them ownership in our company, money, etc. - but they had no interest. Furthermore, they 14 built and launched their own 'video' app, but left it to 'compete' on its own merits 15 alongside other third-party apps rather than making it pre-installed ' for all Facebook 16 users. 1 So #1 and #2 made this something w had to jump on, and #3 made us comfortable 17 with the long-term strategic implications. (See http:l/venturebeat.com/2007/05/29/qa- 18 with-ilikes-ali-partovi-on-face book/.) 19 52. Partovi's comments immediately following Zuckerberg's announcement serve 20 both to reflect the general sentiment held by Developers -that Facebook had made clear its long- 21 term commitment to a level playing field and equal access to data for all Developers- and to 22 show how Facebook's allies (Partovi was an early advisor and shareholder after all), were 23 committed to helping Facebook grow its new operating system quickly and induce developers to 24 participate with large investments of capital. After all, iLike saw massive growth in the two years 25 following its decision to build on the Facebook Platform and was ultimately acquired by 26 MySpace in 2009 in large part due to that growth. 27 28 27 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 everywhere the tools to create applications that we just wouldn't have the resources to 2 build in-house, and those applications make Facebook an even better way for our users to 3 exchange information. Developers also benefit from the Facebook Platform a it gives 4 them the potential to broadly distribute their applications and even build new business 5 opp rtun iti es. 6 *** 7 What kinds of applications can be built on Facebook Platform? The kinds of 8 applications developers can build on Facebook Platfonn are lintited only by their 9 imaginations. Because applications are based on the Facebook social graph they can be 10 more relevant to users, keeping people in touch with what and whom they care about. 11 We've already seen a variety of applications built by our developer partners, including 12 those for sharing media files, book reviews, slideshows and more. Some of the 13 possibilities ofFacebook applications are illustrated in the Facebook Platform Application 14 Directory, available at http://facebook.com/apps. 15 *** 16 Are there any restrictions on what developers can build? Developers are encouraged 17 to exercise their reativity when building applications. Of course, all applications are 18 subj ect to the Terms of Service that every developer agrees to, which include basic 19 requirements such as not storing any sensitive user information, not creating any offensive 20 or illegal applications, and no building anything that phi shes or spam users. And users 21 will always have the power to report any applications that compromise Facebook's trusted 22 environment, keeping our users' information safe. 23 *** 24 How will Facebook deal with applications that compete with one another or even 25 compete with Facebook-built applications? We welcome developer with competing 26 applications, including developers whose applications might compete with Facebook-built 27 applications. Many applications are likely to offer similar features. We ve designed 28 22 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 that all developers have a new way of doing business ifthey choo e to take advantage of 2 it. There are whole_companies that are forming whose only product is a Facebook 3 Platfom1 application. That provides an opportunity for them, it provides an opporlunity foi" 4 people who want to make money by investing in those companies, and 1 think that's 5 something that's pretty exciting to the business community." (See 6 http://content.time.com/time/business/article/0,8599,1644040,00.html) 7 57. In these public statements to Time Magazine, Zuckerberg made at least four 8 distinct promises: (1) Facebook would allow developers to build applications as if they were 9 developers employed by Facebook; (2) Facebook would offer developers on Facebook Platform a 10 new way of doing business; (3) Facebook would support an ecosystem where entire companies 11 could be formed whose sole business activity was within the Facebook Platform ecosystem; (4) 12 Facebook would support an ecosystem where investors could reasonably rely on Facebook to 13 make money by investing in companies solely devoted to the Facebook Platform ecosystem. 14 58. Then on September 17, 2007, Facebook went even further by setting up a $10 15 million fund exclusively devoted to providing grants to developers to build on Facebook 16 Platform. Facebook and its partners in the fund would not even take equity in the developer; they 17 were offering free money to build applications on Facebook Platform with the only commitments 18 being that the grantee use the money to build on Facebook Platform and that Facebook's partners 19 would have the opportunity to invest first if they were interested in doing so. When asked why 20 Facebook was forming this fund, it replied: "We are fanning this fund to help grow the Facebook 21 application ecosystem. By decreasing the banier to sta11 a company, we hope to entice an even 22 larger group of people to become entrepreneurs and build a compelling business on Facebook 23 Platform. We hope this is also a funding model that other venh1re capitalists will follow." (See 24 http://500hats.typepad.com/500blogs/2007/09/facebook-announ.html.) 25 59. Facebook's conduct in providing free money to developers to build applications on 26 Facebook Platform implies a specific promise that it will support developers' opportunity to 27 "build a compelling business on Facebook Platform" and that it is committed long-term to the 28 29 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 stability ofFacebook Platform as an ecosystem that can support substantial investment and where 2 investors who participate in that ecosystem can expect a level playing field upon which to 3 generate a return on that investment. 4 60. Indeed, others were quick to follow Facebook's lead in making investors 5 comfortable with supporting this new industry with large sums of capital. Numerous venture 6 capital firms or funds were soon established that invested solely in Facebook applications. In 7 September 2007, Wired Magazine reported the following: "And by turning itself into a platform 8 for new applications, Facebook has launched a whole new branch of the software development 9 industry, just like Bill Gates did with MS-DOS in the 1980s. By allowing developers to charge 10 for their wares or collect the advertising revenue they generate, Zuckerberg set up a system for 11 every programmer to get paid for their efforts. Now venture capitalists like Bay Partners are 12 scrambling to fund almost anyone who has an idea for a Facebook application." (See 13 https ://archive. wired. com/techbiz/startups/news/2007/09/ff_face book? currentP age=all.) 14 61. As a result ofFacebook and its partners' tremendous efforts in inducing 15 Developers to build applications on Facebook Platform and promising them access to the Graph 16 on neutral and equal terms, Facebook Platform quickly became, in the words of AdWeek, "the 17 most viral software distribution system ever". The overall traffic to Facebook increased by 33% 18 within three weeks ofthe announcement. By December, the Facebook user base had grown from 19 24 million at the time of the announcement to 58 million, a 141% increase. Where Facebook had 20 been adding about 100,000 new users per day prior to Facebook Platform, it was now adding 21 more than 250,000 users per day. (See http://www.adweek.com/socialtimes/top-10-facebook- 22 stories-of-2007/211540.) 23 62. While it touted Facebook Platform to Developers around the world, Facebook did 24 not state or imply that access to Facebook Platform might later be rescinded or provided on an 25 unequal basis. In fact, Facebook repeatedly promised that access would be provided on an equal 26 basis relative to Facebook and other developers. Upon information and belief, during this time, 27 Facebook in fact provided special, unequal access to the Graph to large companies who were 28 30 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 close partners of Facebook and made substantial unrelated advertising payments to Facebook to 2 the systematic disadvantage of smaller companies. This fact was not made known to or 3 reasonably discoverable by the Developer community at large, including 643, at the time 4 preferential access was being given. 63. 5 By the end of2009, in large part due to Facebook Platform's success in inducing 6 developers to make investments in this new ecosystem, Facebook's user growth had skyrocketed 7 from 24 million active users at the time of the announcement ofFacebook Platform in May 2007 8 to over 3 50 million users in December 2009. 64. 9 In late 2009, Facebook released a document "A Look Back on the App Economy 10 ofFacebook in 2009," in which it cited numerous success stories. For instance, Facebook app 11 Playfish was acquired by Electronic Arts that year for no less than $275 million. Watercooler, a 12 leading fantasy sports application on the Facebook Platform, successfully raised $5.5 million to 13 fuel its growth. Weardrobe was acquired by Like.com for an undisclosed sum. The document, 14 published by the Director of the Facebook Developer Network, ended: "We'd like to say thank 15 you to the developers and entrepreneurs who make up the Facebook Platform ecosystem and 16 congratulations on your accomplishments in 2009." (See 17 http://web.archive.org/web/20091223 055629/http://developers.facebook.com/news.php?blog= 1& 18 story=351.) 19 III. 20 21 22 23 24 25 26 FACEBOOK LAUNCHED GRAPH API IN 2010 TO IMPROVE THE RELIABILITY OF DATA ACCESS FOR DEVELOPERS 65. On or about April21, 2010, Facebook announced the launch of Graph Application Programming Interface ("Graph API") as a key new component of Facebook Platform at its developer conference. Graph API streamlined and formalized the process whereby Developers, with the consent of Facebook users, could read data from and write data to the Graph. 66. Developers could only access Facebook content (referred to as "endpoints") with explicit permission from Facebook users. Examples of endpoints include a user's birthdate, favorite songs, or photos. 27 28 31 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 67. Graph API also permitted access to endpoints regarding a user's friends, requiring 2 both the friend's and the user's consent. One such endpoint was the set of photos that a user's 3 friends had chosen to share with that user (the "Friends' Photos Endpoint"). A user's friends 4 could control access to their photos and other endpoints by Developers even if they were not 5 users of the Developer's application simply by clicking a check box on the main Facebook 6 privacy page. The interface and process for users to manage these privacy settings is virtually 7 identical today as it was during this time when Graph API was launched. 8 9 68. By granting Developers access to the Friends' Photos Endpoint, Facebook allowed Developers to build applications that enabled a Facebook user to search the user's friends' photos 10 via a Facebook Platform application, assuming the user's friend approved of such access. For 11 avoidance of doubt, a user's friend had complete control over the permission settings and under 12 no circumstance could a user view information in a third-party application that the user could not 13 also view on Facebook itself. 14 15 16 69. During the announcement of Graph API, Facebook touted several features of Graph API in order to increase its appeal to Developers such as 643. 70. Specifically, at the F8 Conference 2010, Zuckerberg announced: "The open graph 17 puts people at the center of the web- it means that the web can become a set of personally and 18 meaningfully semantic connections between people ... Three years ago at our first F8 we launched 19 Facebook Platform, and together we all started an industry ... We think what we have to show you 20 today will be the most transformative thing we've ever done for the web ... Use the open graph to 21 make it so that people can have instantly social and personalized expetiences everywhere they go. 22 We're gonna be announcing a few pieces of new teclmology that make this possible- the first is 23 the Graph API- makes it completely simple to read connections to Facebook's map of the 24 graph ... implemented oo top of an open standard." (See 25 https://www.youtube.com/watch?v=4SOcRKINiSM.) 26 71. After Zuckerberg completed his keynote at F8 2010, Bret Taylor, a Facebook 27 employee, further explained what Graph API meant for Developers: "With Graph API every 28 32 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 ofFacebook Platform. Facebook is inviting anyone to develop applications for their users on top 2 of what Mark calls their "social graph"- the core of their service which basically keeps track of 3 real people and their real connections to each other. ... [Facebook's] growth will be dramatically 4 accelerated by the Platform announcement. If Facebook is adding 100,000 new users per day with 5 its own few simple applications (like its photo sharing, a very simple service that has given 6 Facebook twice as many photos as all other photo sharing sites combined), what will happen 7 when thousands or tens of thousands of developers start building apps in Facebook and marketing 8 them to more users? Facebook will reach 50 million, then 100 million, then 200 million users, and 9 beyond. Rather than continue to try to develop features within its own proprietary, closed 10 network, basically keeping all of its users to itself. .. Facebook intuitively gets the concepts that 11 are so brilliantly discussed in Wikinomics (which are so non-intuitive to old school business 12 types), and has chosen to open up its network for all to participate in ... Application developers 13 can now have access to core Facebook features, such as user profiles and user connections, and 14 even publishing to the News Feed, all with the control and permission ofFacebook users ... When 15 Facebook has 100 million users, in the not too distant future, having the ability to develop an App 16 in their system will almost be like being able to get a link on Google's own home page." (See 17 http://www.paulallen.net/prediction-facebook-will-be-the-largest-social-network-in-the-world/.) 18 50. To Developers, Facebook Platform represented not just an entirely new operating 19 system, but an economy that could reorganize the entire Internet (potentially replacing Google as 20 the dominant form of organizing the world wide web). The sentiment among Developers, as 21 widely held throughout the industry and reported by popular sites like TechCrunch and the Wall 22 Street Journal, was that if you aren't building for Facebook Platform, you will be left behind 23 (http ://techcrunch.com/2007/05/24/facebook-launches-facebook-platform-they-are-the-anti- 24 myspace/) (http://www.wsj.com/public/article/SB117971397890009177- 25 wjdKPmjAqS _9ZZbwiRp _ CoSqvwQ_20070620.html). 26 51. Facebook and the Developers who were selected to participate in the private beta 27 ofFacebook Platform quickly set out to make Developers comfortable with this grandiose vision 28 25 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 and create a level of comfort to entice them to participate in this entirely new industry. For 2 instance, on May 29, 2007, just five days after Zuckerberg's announcement ofFacebook 3 Platform, Venture Beat, the popular tech blog, did a Q&A with iLike founder, Ali Partovi, who 4 was also an early advisor and shareholder of Facebook. iLike was the first successful application 5 on Facebook Platform and for quite some time was the largest music application on the Facebook 6 Platform. iLike was purchased by MySpace in 2009. 7 Tell me about your experiences with Platform so far. You've been working on putting 8 iLike on Facebook for several months now. Yet on the integration since Friday morning, 9 there have been bugs and other issues on iLike's end. What's the status? 10 Partovi: So, first to give you the back-story on how we got involved. Over the past several 11 months, we've pushed and pushed with Facebook asking for some sort of exclusive 12 relationship. They repeatedly said they won't do an exclusive relationship but would 13 rather create a level playing field where we could compete with other third parties. We 14 then gave up a bit, and we were actually a bit late to the game learning about the platform 15 in detail. But when we finally did get access, our President, Hadi Partovi (my twin 16 brother) took very little time to decide this was a huge strategic priority. That was a month 17 ago. We re-prioritized everything else, and started moving our people off other projects 18 onto this. First two or three people, then a few more, and by the end it was a huge group of 19 engineers pulling back-to-hack all-nighters for a week-long sprint to the launch. 20 What made iLike think that Facebook Platform would be a big deal? What stood out about 21 it? 22 Hadi has a strong background in the concept of platforms ... at 24 he became the head of 23 product management in the IE group at Microsoft, and was a key player in the browser 24 wars. A month ago, even though the Facebook Platform wasn't fully fleshed out, he saw 25 just from the early beginnings of it that this could redefine web development. What he 26 said was, 'in the history of computing, there was the personal computer, there was 27 Windows, there was the web, and now the Facebook Platform'. You can imagine that I 28 26 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 and most our company was pretty skeptical. But he makes these calls so we followed him. 2 As to what stood out, it's a combination of three things: (1) the technology itself- 3 Facebook Platform, like any platform, offers the developer building blocks to build apps 4 faster than they could if they were starting from scratch, and to tap into a rich source of 5 data & capabilities that would never otherwise be available; (2) the potential for viral 6 spread- due to the way the Facebook news feed works, an app can spread across the 7 community entirely by viral spread, as friends get notified when one person adopts 8 it. .. this essentially bypasses the idea of trying to make your app 'viral' as a standalone, 9 because Facebook is itself naturally viral; (3) the rhetoric from the Facebook management 10 team, starting from the CEO himself, made it clear that they have a long-term 11 commitment to a level playing field. For example, they absolutely refused to give us any 12 special advantage, insisting that the market needs to see a level playing field ... we offered 13 them ownership in our company, money, etc. - but they had no interest. Furthermore, they 14 built and launched their own 'video' app, but left it to 'compete' on its own merits 15 alongside other third-party apps rather than making it pre-installed ' for all Facebook 16 users. 1 So #1 and #2 made this something w had to jump on, and #3 made us comfortable 17 with the long-term strategic implications. (See http:l/venturebeat.com/2007/05/29/qa- 18 with-ilikes-ali-partovi-on-face book/.) 19 52. Partovi's comments immediately following Zuckerberg's announcement serve 20 both to reflect the general sentiment held by Developers -that Facebook had made clear its long- 21 term commitment to a level playing field and equal access to data for all Developers- and to 22 show how Facebook's allies (Partovi was an early advisor and shareholder after all), were 23 committed to helping Facebook grow its new operating system quickly and induce developers to 24 participate with large investments of capital. After all, iLike saw massive growth in the two years 25 following its decision to build on the Facebook Platform and was ultimately acquired by 26 MySpace in 2009 in large part due to that growth. 27 28 27 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 to accelerate the massive economy Facebook had built. By January 2012, Facebook Platform had 2 created 232,000 jobs in the EU alone, amounting to $15.3 billion ofvalue to the European 3 economy. By February 2012, 250 million people were playing games on Facebook Platform each 4 day (that is 12 times more people than the average viewership of American Idol, the highest-rated 5 TV show in the history of television). By April 2012, 7 of the 10 highest grossing apps in the 6 Apple App Store were built on Facebook Platform. (See 7 http://mashable.com/20 12/05/24/facebook-developer-platform-infographic/#fDCxuACag5qr.) It 8 should be noted, in large part due to its long-term commitment to Facebook Platform, Facebook 9 exceeded 1 billion users in 2012. 10 IV. THE FTC ORDERED FACEBOOK NOT TO MISREPRESENT THE MANNER IN WHICH FACEBOOK COLLECTS, STORES OR TRANSMITS USER DATA 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 79. On or about July 27, 2012, the United States Federal Trade Commission ("FTC") entered a Decision and Order (the "FTC Order") against Facebook. 80. The FTC Order entered following a consent agreement between FTC and Facebook. 81. The FTC noted in the FTC Order that the FTC had reason to believe Facebook has violated the Federal Trade Commission Act. 82. The FTC Order provided, among other things, that Facebook and its representatives "shall not misrepresent in any manner, expressly or by implication, the extent to which it maintains the privacy or security of covered information .... " 83. The FTC Order defined "covered information" to include an individual consumer's photos, among other things. 84. The FTC Order also provided that Facebook and its representatives "shall not misrepresent in any manner, expressly or by implication ... the extent to which [Facebook] makes or has made covered information accessible to third parties." 26 27 28 36 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 2 v. IN 2012, ZUCKERBERG DECIDED TO REMOVE ACCESS TO FACEBOOK'S DATA TO ALL POTENTIALLY COMPETITIVE APPLICATIONS UNLESS THEY PROVIDED SUBSTANTIAL FINANCIAL OR OTHER CONSIDERATION TO JUSTIFY CONTINUED ACCESS. 3 85. Upon information and belief, from 2011 through 2015, Zuckerberg held 4 discussions and meetings with Defendants Cox, Olivan, Lessin, Vernal and Sukhar (the 5 "Conspiring Facebook Executives") to design and implement the alleged bait and switch scheme. 6 Upon information and belief, beginning in 2011 and 2012, Zuckerberg held discussions with 7 Defendants Cox, Olivan, and Lessin (in addition to other Facebook executives like Sheryl 8 Sandberg, Daniel Rose, and Andrew Bosworth) where Zuckerberg communicated his decision to 9 shut down access to Graph API data to applications that were competitive with current Facebook 10 products and with products Facebook may choose to launch in the future, even ifFacebook had 11 not begun working on such products. Upon information and belief, this plan to weaponize and 12 restrict Facebook Platform was communicated to, discussed with and ratified by the Facebook 13 Board of Directors in the summer of2012. Upon information and belief, Zuckerberg then brought 14 Vernal directly into the discussions in late 2012 in order to oversee and implement the bait and 15 switch plan. Upon information and belief, Vernal planned a public announcement of this decision 16 at the end of 2012 but Zuckerberg prohibited the announcement. Upon information and belief, 17 Facebook instead made in January 2013 a partial disclosure of the decision that suppressed 18 material facts at Zuckerberg's request under an announcement regarding a vaguely defined 19 "Reciprocity Policy" 20 Chttps://web.arch..ive.org/web/201 30 125212302/https ://develo p rs.facebook.com/blog/po t/2013/0 21 1/25/cLru·ifying-our- pl atform-policies/ and 22 https://web.archive.org/web/20 130216042126/https://developers.facebook.com/policy/). Upon 23 information and belief, from that time on, the Conspiring Facebook Executives actively concealed 24 material facts, made only partial disclosures, and made materially false statements regarding the 25 decisions Zuckerberg had in fact made in late 2012 concerning the Reciprocity Policy. Upon 26 information and belief, the Conspiring Facebook Executives began enforcing all aspects of 27 28 37 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Zuckerberg's decision notwithstanding that Facebook only announced certain aspects of the 2 decision and maliciously withheld others. Upon information and belief, the Defendants' conduct 3 in this regard was undertaken in concert with other large companies who would benefit from such 4 changes. Upon information and belief, in mid-2013, Zuckerberg, Vernal and Facebook Director 5 of Engineering Doug Purdy, aggressively sought to make Defendant Sukhar the front man 6 externally for this bait and switch scheme, which Sukhar resisted until late 2013 because he knew 7 the conduct was wrongful and malicious. However, in late 2013, Sukhar conceded and from that 8 time on actively ratified, acquiesced in and advanced key components necessary to the 9 implementation ofthe fraudulent and anti-competitive scheme in 2014 and 2015. 10 86. Upon information and belief, during these discussions and meetings, Zuckerberg 11 communicated to the Conspiring Facebook Executives his decision to require that any company 12 that wishes to continue to access the Graph API data that Facebook previously promised on 13 neutral and equal terms would be required to provide substantial financial consideration to 14 Facebook, and even then, only companies that were not directly competitive would be permitted 15 to do so. 16 87. Upon information and belief, during these discussions and meetings, Zuckerberg 17 and the Conspiring Facebook Executives discussed large companies with which to conspire 18 around this effort at the expense of other companies that represented competitive threats to 19 Facebook. Further, upon information and belief, Zuckerberg sought the guidance and active 20 assistance of the Conspiring Facebook Executives around the companies with which Facebook 21 would conspire and how to develop a plan to do so. 22 88. Upon information and belief, during these discussions and meetings, Zuckerberg 23 sought the guidance and active assistance of the Conspiring Facebook Executives to execute key 24 components of this bait-and-switch scheme. Upon information and belief, Zuckerberg tasked 25 Vernal with implementing an engineering plan to remove data access to tens of thousands of 26 potentially competitive applications. Upon information and belief, Zuckerberg tasked Lessin, Cox 27 and Olivan with engaging other departments at Facebook around executing this plan to show 28 38 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 which categories of applications were competitive with Facebook's current or future products in 2 an effort to expand the extent to which Facebook could consider a broad range of applications to 3 be directly competitive with Facebook and Facebook's close partners. Upon information and 4 belief, Zuckerberg tasked Sukhar and V emal with developing a plan to communicate and mask 5 this fraudulent scheme to Facebook employees and, eventually, Developers and the public. Upon 6 information and belief, the Conspiring Facebook Executives then tasked various other Facebook 7 employees to accomplish a wide range of tasks, including: to analyze the revenue impact of this 8 bait-and-switch scheme; to audit and categorize applications so as to determine which ones to 9 restrict data access and which ones to permit special access; to proactively reach out to certain 10 companies to provide advance notice and set financial terms to conspire around restricting this 11 data access to the benefit ofboth Facebook and these large partner companies and at the expense 12 of all other market participants; and to engage in a wide range of other tasks related to executing 13 this scheme and avoiding any public relations or legal ramifications for it. 14 89. Upon information and belief, in mid-to-late 2012, the Conspiring Facebook 15 Executives began communicating to various Facebook employees that data access would be 16 severely restricted to many companies that built applications related to contacts and calendar 17 management, messaging, photo sharing, video sharing and streaming, online dating, lifestyle, 18 games, news, books, fitness and various utility applications. Upon information and belief, the 19 companies that were exempted from these data restrictions were those that provided substantial 20 financial consideration to Facebook or had held discussions with Facebook around long-term 21 strategic partnerships that provided significant value to Facebook in other areas of its business. 22 90. Upon information and belief, the Conspiring Facebook Executives actively 23 encouraged and even required other Facebook employees to expand the definition of a 24 competitive application in order to restrict data access to as many software companies as possible. 25 Upon information and belief, the Conspiring Facebook Executives even encouraged Facebook 26 employees, including their direct subordinates, to take action against certain direct competitors in 27 advance ofFacebook's notice to Developers restricting Graph API data access. Upon information 28 39 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 stability ofFacebook Platform as an ecosystem that can support substantial investment and where 2 investors who participate in that ecosystem can expect a level playing field upon which to 3 generate a return on that investment. 4 60. Indeed, others were quick to follow Facebook's lead in making investors 5 comfortable with supporting this new industry with large sums of capital. Numerous venture 6 capital firms or funds were soon established that invested solely in Facebook applications. In 7 September 2007, Wired Magazine reported the following: "And by turning itself into a platform 8 for new applications, Facebook has launched a whole new branch of the software development 9 industry, just like Bill Gates did with MS-DOS in the 1980s. By allowing developers to charge 10 for their wares or collect the advertising revenue they generate, Zuckerberg set up a system for 11 every programmer to get paid for their efforts. Now venture capitalists like Bay Partners are 12 scrambling to fund almost anyone who has an idea for a Facebook application." (See 13 https ://archive. wired. com/techbiz/startups/news/2007/09/ff_face book? currentP age=all.) 14 61. As a result ofFacebook and its partners' tremendous efforts in inducing 15 Developers to build applications on Facebook Platform and promising them access to the Graph 16 on neutral and equal terms, Facebook Platform quickly became, in the words of AdWeek, "the 17 most viral software distribution system ever". The overall traffic to Facebook increased by 33% 18 within three weeks ofthe announcement. By December, the Facebook user base had grown from 19 24 million at the time of the announcement to 58 million, a 141% increase. Where Facebook had 20 been adding about 100,000 new users per day prior to Facebook Platform, it was now adding 21 more than 250,000 users per day. (See http://www.adweek.com/socialtimes/top-10-facebook- 22 stories-of-2007/211540.) 23 62. While it touted Facebook Platform to Developers around the world, Facebook did 24 not state or imply that access to Facebook Platform might later be rescinded or provided on an 25 unequal basis. In fact, Facebook repeatedly promised that access would be provided on an equal 26 basis relative to Facebook and other developers. Upon information and belief, during this time, 27 Facebook in fact provided special, unequal access to the Graph to large companies who were 28 30 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 Facebook's users (those who were friends with 643's users) would generate economic benefit for 2 643 in the future. 3 93. On December 11, 2012, 643 entered into Facebook's Statement of Rights and 4 Responsibilities ("SRR" or "Agreement"). The SRR is the "terms of service that governs 5 [Facebook's] relationship with users and others who interact with Facebook. By using or 6 accessing Facebook, [643] agree[ d) to this Statement .... " (FB _0000006, FB _0000017). Further, 7 since 643 had "a principal place of business in the US or Canada, this Statement is an agreement 8 between [643] and Facebook, Inc." (FB_0000015, FB_0000025). 9 The primary consideration offered by Facebook is described as follows in the 94. 10 Agreement: "We give you all rights necessary to use the code, APis, data, and tools you receive 11 from us." (FB_OOOOOlO, FB_0000021). In exchange, 643 gave Facebook various rights and other 12 forms of valuable consideration, including, for instance, the right to issue "a press release 13 describing [Facebook's] relationship with [643]," the "right to analyze [643's] application, 14 content, and data for any purpose, including commercial" purposes like targeting advertisements. 15 (FB_OOOOOlO, FB_0000021). In other words, 643 gave Facebook the right to leverage the user 16 engagement from 643's App to increase Facebook's advertising revenues. 17 In consideration of the rights to access Facebook's data, 643 also committed to a 95. 18 wide range of obligations around which it incurred substantial cost, such as ensuring that 643 19 would "provide customer support for its application," "make it easy for users to contact" 643 or 20 "remove or disconnect" 643's App (FB_0000010, FB_0000021). A small sample ofthe 21 additional requirements Facebook placed on 643, many of which required incurring costs, are 22 listed below: 23 24 25 26 27 28 a. You will not collect users' content or information, or otherwise access Facebook, using automated means (such as harvesting bots, robots, spiders, or scrapers) without our prior permission. b. You will not engage in unlawful multi-level marketing, such as a pyramid scheme, on Facebook. c. You will not upload viruses or other malicious code. 41 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 2 3 d. You will not solicit login information or access an account belonging to someone else. e. You will not bully, intimidate, or harass any user. f. 4 5 6 7 8 You will not post content that: is hate speech, threatening, or pornographic; incites violence; or contains nudity or graphic or gratuitous violence. g. You will not develop or operate a third-party application containing alcoholrelated, dating or other mature content (including advertisements) without appropriate age-based restrictions. h. You will follow our Promotions Guidelines and all applicable laws if you publicize or offer any contest, giveaway, or sweepstakes ("promotion") on Facebook. 9 1. You will not use Facebook to do anything unlawful, misleading, malicious, or discriminatory. J. You will not do anything that could disable, overburden, or impair the proper working or appearance ofFacebook, such as a denial of service attack or interference with page rendering or other Facebook functionality. 10 11 12 13 14 k. You will not facilitate or encourage any violations of this Statement or our policies. 15 1. 16 m. You will have a privacy policy that tells users what user data you are going to use and how you will use, display, share, or transfer that data and you will include your privacy policy URL in the Developer Application. 17 18 19 20 You will only request data you need to operate your application. n. You will not use, display, share, or transfer a user's data in a manner inconsistent with your privacy policy. o. You will delete all data you receive from us concerning a user if the user asks you to do so, and will provide a mechanism for users to make such a request. 21 22 23 24 p. You will not include data you receive from us concerning a user in any advertising creative. q. You will not directly or indirectly transfer any data you receive from us to (or use such data in connection with) any ad network, ad exchange, data broker, or other advertising related toolset, even if a user consents to that transfer or use. 25 r. 26 27 28 You will not sell user data. If you are acquired by or merge with a third party, you can continue to use user data within your application, but you cannot transfer user data outside of your application. (FB-0000007, FB_0000010, FB_0000018, FB _ 0000020-FB _ 0000021) 42 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 67. Graph API also permitted access to endpoints regarding a user's friends, requiring 2 both the friend's and the user's consent. One such endpoint was the set of photos that a user's 3 friends had chosen to share with that user (the "Friends' Photos Endpoint"). A user's friends 4 could control access to their photos and other endpoints by Developers even if they were not 5 users of the Developer's application simply by clicking a check box on the main Facebook 6 privacy page. The interface and process for users to manage these privacy settings is virtually 7 identical today as it was during this time when Graph API was launched. 8 9 68. By granting Developers access to the Friends' Photos Endpoint, Facebook allowed Developers to build applications that enabled a Facebook user to search the user's friends' photos 10 via a Facebook Platform application, assuming the user's friend approved of such access. For 11 avoidance of doubt, a user's friend had complete control over the permission settings and under 12 no circumstance could a user view information in a third-party application that the user could not 13 also view on Facebook itself. 14 15 16 69. During the announcement of Graph API, Facebook touted several features of Graph API in order to increase its appeal to Developers such as 643. 70. Specifically, at the F8 Conference 2010, Zuckerberg announced: "The open graph 17 puts people at the center of the web- it means that the web can become a set of personally and 18 meaningfully semantic connections between people ... Three years ago at our first F8 we launched 19 Facebook Platform, and together we all started an industry ... We think what we have to show you 20 today will be the most transformative thing we've ever done for the web ... Use the open graph to 21 make it so that people can have instantly social and personalized expetiences everywhere they go. 22 We're gonna be announcing a few pieces of new teclmology that make this possible- the first is 23 the Graph API- makes it completely simple to read connections to Facebook's map of the 24 graph ... implemented oo top of an open standard." (See 25 https://www.youtube.com/watch?v=4SOcRKINiSM.) 26 71. After Zuckerberg completed his keynote at F8 2010, Bret Taylor, a Facebook 27 employee, further explained what Graph API meant for Developers: "With Graph API every 28 32 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 After careful review of the Agreement, 643 reasonably concluded that these requirements meant 2 that 643 in the future may be charged a fee to access data, which would be charged consistently 3 across all other companies, and that the amount of data 643 could access at any time may be rate- 4 limited to assist Facebook in managing its costs in maintaining the API. Rate-limiting is common 5 across most software APis to ensure that an API user can only access a certain amount of data 6 over a specified period oftime. This assists the API provider, in this case Facebook, to manage 7 costs associated with maintaining the API. Further, 643 understood Facebook to mean that 8 Facebook could compete with 643 on a level playing field where the consumer decides which 9 products succeed in the market. However, upon information and belief, Zuckerberg and the 10 Conspiring Facebook Executives took active, malicious, fraudulent and oppressive measures to 11 ensure that consumers had less choice and control over the products available to them, ensuring 12 that Facebook and those Developers who agreed to provide Facebook with cash or in-kind 13 payments win the market by not having to compete with applications from other Developers. 14 100. Nowhere in the Agreement did Facebook state that access to data could be 15 provided on an unequal basis or that Facebook reserved its rights to provide data on an unequal, 16 privileged or arbitrary basis. Nowhere in the Agreement did Facebook state that it reserved its 17 rights to remove entirely the social data in the Social Graph, the core data that defined Facebook 18 Platform for over seven years and incentivized Developers to build applications on Facebook 19 Platform instead of other operating systems like Windows or Macintosh. Facebook's conduct for 20 seven years affirmed the reasonableness of 643 's interpretation of its Agreement with Facebook. 21 As the Agreement was drafted entirely by Facebook, ifFacebook had intended by its terms to 22 convey that it could provide access to data on unequal, privileged or arbitrary terms, or that it 23 could shut down entirely access to entire categories of social data representing the most 24 commonly used data under Graph API, it could have done so with much clearer language. 25 101. As of March 1, 2017, Facebook' s Platform Policies still include obligations around 26 social data, stating that Developers can "Only use friend data (including friends list) in the 27 person's experience in your app." (See developers.facebook.com/policy, Section 3.3). This 28 44 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 demonstrates that some Developers who have entered into special agreements with Facebook still 2 have access to this social data notwithstanding that the data has been restricted to all other 3 Developers. Upon information and belief, many Developers with close relationships to Facebook 4 and who paid Facebook substantial sums of cash or other financial consideration continue to 5 access this data in some form, notwithstanding that it has been restricted to all other software 6 companies. 7 102. Before and during the time 643 was considering investing in Facebook Platform, 8 Facebook repeatedly stated that it intended to have an open governance process around its terms 9 of use and that Developers would participate in the evolution of their agreements with Facebook. 10 For instance, on April22, 2009, Zuckerberg released a video to Developers and users in which he 11 stated that a community as "large and engaged [as Facebook] needs a more open process, and a 12 voice in governance. That's why a month ago, we announced a more transparent and democratic 13 approach to governing the Facebook site. Since that time, users and experts from around the 14 world have read and offered comments on the documents that we've proposed, the Facebook 15 Principles and the Statement of Rights and Responsibilities. We've read all of these comments 16 and we've created new drafts ofthe documents .... Now we want you to vote and share with us 17 which documents you think should govern Facebook. I hope you take a minute or two to vote and 18 also to fan the Facebook Site Governance Page." 19 (https://www.facebook.com/fbsitegovernance/videos/vb.69178204322/718903095373/?type=2&t 20 heater). These various representations led 643 reasonably to conclude that Facebook intended to 21 be a good actor in enforcing its Agreement with 643. 22 103. In entering into the Agreement, 643 reasonably relied on the various official 23 statements, announcements, policy documents and verbal representations ofFacebook employees, 24 and in particular of Zuckerberg, and the Facebook Platform FAQ document Facebook had 25 produced, as well as the experience of thousands of other Developers who had successfully built 26 applications on Facebook Platform. 643 could not have known that Zuckerberg had already 27 decided to restrict access to the data necessary for 643's technology to work, as Facebook had 28 45 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 exclusive access to this information and had taken measures to actively conceal this fact from 2 643, other Developers and the public. 104. 3 643 conducted user research to determine how people would like their photos 4 sorted. The user research overwhelmingly concluded that users between the ages of 25 and 45 5 wanted to more easily find photos of their friends in a summer setting. Consequently, 643 decided 6 to test its technology by building an application called Pikinis ("the App"). The App was 7 available for download on any iOS-compatible device, including the iPhone and iPad. The App 8 enabled Facebook users to reduce time spent searching through their photos by automatically 9 finding summer photos that their friends have shared with them through Facebook's network, 10 assuming their friends permitted 643 to access the photos. This App enabled 643 to more rapidly 11 access large numbers of photos in order to train its technology and develop new and more 12 powerful applications in order to convert prospective customers. 643 also had plans to develop an 13 Android version of the App in order to convert prospective customers who owned Android 14 phones. 15 105. The App required use ofFacebook's Graph API. The App used 643's image 16 recognition technology to search through shared photos and identify the ones in a summer setting, 17 which included friends at the beach or pool, on a boat, in their bathing suits and the like. 643 had 18 intended to use its technology to build a number of other applications unrelated to the subject 19 matter of the App. 20 106. The App could only access and display photos that Facebook users had chosen to 21 share based on their Facebook privacy settings, even if the Facebook user had never installed 22 643 's App. In other words, the only photos a user could see in the App were ones the user could 23 also see on Facebook. 643's App had no photos that were not also displayed on Facebook.com. 24 All the photos and all content in the App was subject to and passed Facebook's own policy, 25 privacy and content reviews. It was not possible for the App to display content that was not 26 subject to and had not passed Facebook's own policy, privacy and content reviews. Therefore, it 27 was not possible for the App to contain objectionable content as all of the content was subject to 28 46 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 76. On September 24, 2011, Facebook further extended its long-term commitment to 2 Facebook Platform by expanding Open Graph to accelerate its reorganization of the disparate 3 content on the Internet. (See http:/lmashable.com/2012/05/24/facebook-developer-platform- 4 infographic/#fDCxuACag5qr.) In his keynote address at F8 2011 on September 24, 2011, 5 Zuckerberg stated to a packed auditorium of developers: "The next era is defined by the apps and 6 depth of engagement that is now possible now that this whole network has been established ... In 7 2007 in our verv first F8 I introduced the concept of the social graph, all of the relationships 8 between people in the world. Last year we introduced the concept of the open graph as not only 9 the map of all t11e relationships but all of the connections in the world .... This year, we retaking 10 the next step: we're going to make it so that you can connect to anything you want in any way 11 you want. ... Sometimes I think about what we redoing with the open graph is helping to define a 12 brand new language for how people connect ... every year we take the next step and make some 13 new social apps possible. Open graph enables apps that focus prima1ily on two types of things: 14 the first is filling out yam timeline, and the second is helping you discover new things through 15 your friends." 16 77. Facebook thus made at least four distinct representations of fact in this September 17 24, 2011 announcement: (1) Facebook has a long-term commitment to the Facebook Platform and 18 ensuring a fair playing field for developers and has had such a commitment for over four years 19 now; (2) Facebook is committed to extending the Facebook Platform to provide developers with 20 more ways to innovate and build businesses; (3) in keeping with this long term commitment, 21 Facebook will continue to help make new kinds of social apps possible; and (4) Facebook is in 22 particular focused on helping you discover new things through your friends and Facebook 23 Platform will enable developers seeking to do so. 24 78. Facebook stated that the extension of the Graph API at F8 2011 was simply the 25 next step in Facebook's long-term commitment to serve as a platform for other developers, a 26 commitment that every statement and action it took since May 2007 (a period of well over 4 27 years) reaffirmed without a shadow of a doubt. The extension of the Facebook Platform continued 28 35 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 and becoming subject to the website's terms and conditions. Many of these qualified prospective 2 customers were never able to enter into contract with 643 as a direct result ofFacebook's anti- 3 competitive and fraudulent schemes. Further, at least 13,000 prospective customers never 4 received an email from 643 as a direct result ofFacebook's anti-competitive and fraudulent 5 schemes. 643 acquired the contact information and made plans to contact these prospective 6 customers at significant cost, but 643 was never able to contact these customers and enter into 7 contract with them as a direct result ofFacebook's conduct. 643 had a reasonable expectation of 8 prospective economic advantage and incurred substantial cost in order to identify and engage the 9 6,000 qualified prospective customers and the additional 13,000 prospective customers in 643 's 10 11 marketing plan. 109. Further, Facebook represented since 2007, and 643 relied on Facebook's 12 representations since that time, that certain Facebook users were prospective customers of any 13 app built on Platform. This is because a key purpose of Platform was to enable new apps to reach 14 Facebook's users with free, organic distribution through the newsfeed APis and friends list APis. 15 Facebook represented for years that this would enable companies like 643 to much more rapidly 16 enter into contracts and secure purchases from new customers since any friend of any existing 17 App user could enter into contract with 643 with a single tap of a button and without 643 having 18 to purchase advertisements. Given that 4,481 users entered into contract with 643, all ofthe 19 Facebook friends ofthese 4,481 customers were prospective customers of643 who could enter 20 into contract with 643 with a single tap on a link sent by their friends. The 4,481 users who 21 entered into contract with 643 had approximately 100,000 friends who were prospective 22 customers of the App and whose friends had a relationship with 643 since they could see on 23 Facebook that their friend had downloaded the App. 643 had a reasonable expectation of 24 prospective economic advantage with these approximately 100,000 prospective customers. 25 110. Finally, 643 engaged in other marketing activities in preparation for a public 26 launch. For instance, 643 purchased advertising from Facebook to test various ad campaigns in 27 Facebook's new mobile advertising product. Facebook confirmed these purchases and ran 643's 28 48 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 various ad campaigns on its public website. As a result ofFacebook's anti-competitive scheme, 2 643 's App was prevented from participating in Facebook's advertising market since it had no 3 functioning App to advertise. Upon information and belief, tens of thousands of other software 4 companies were prevented from participating in Facebook's new mobile advertising market as a 5 result ofFacebook's anti-competitive scheme. 111. 6 During a soft launch or trial period, 643 began selling the App for $1.99 in Apple's 7 App store. The basic version of the App allowed a user to run a certain number of searches per 8 month. In addition, users could choose to pay for premium access, which allowed unlimited 9 searching. 643 offered different pricing tiers for premium access, ranging from $1.99 for a 10 monthly subscription, to $6.99 for 6 months, to $9.99 for 12 months. The App's license 11 agreement with users was tiered, so users could enter into contract with 643 at no cost or for 12 $1.99, but then elect to make additional purchases with a single tap. As a result, 643 reasonably 13 expected that users with whom it had an existing contract would generate additional economic 14 benefits to 643 beyond the terms ofthe then-current contract. In short, existing customers whose 15 contract was set at a lower tier could at any time upgrade their contract tier to generate additional 16 revenues for 643. 17 VII. 18 19 20 21 22 23 24 25 26 27 28 FROM THE MIDDLE OF 2012 UNTIL JANUARY 20, 2015, FACEBOOK ACTIVELY CONCEALED MATERIAL INFORMATION IT HAD AN OBLIGATION TO DISCLOSE WHILE CONTINUING TO MAKE FALSE STATEMENTS TO ENTICE 643 AND OTHER COMPANIES TO MAKE INVESTMENTS FACEBOOK KNEW TO BE IRREPERABLY DAMAGED. 112. Upon information and belief, Zuckerberg and the Conspiring Facebook Executives requested that Facebook employees actively conceal the decision to restrict data access to competitors from internal employees, Developers and the public. Upon information and belief, the Conspiring Facebook Executives made various layers of management aware of this decision on a need-to-know basis periodically from late 2012 until late 2013 and, at all times, required such employees to actively conceal and/or make only partial disclosures of these material facts. 113. During this time, Facebook sent many dozens of communications directly to 643 and hundreds of public communications intended for Developers that informed 643 of material 49 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 changes to Facebook Platform, many of which enticed 643 to make further investments of capital 2 and resources in building on Facebook Platform. Not a single one of these communications 3 referenced that Facebook was restricting access to data critical to the functioning of643's App 4 until January 20, 2015. 5 114. Further, during this time, Facebook held numerous meetups, conferences, 6 hackathons and the like in which Facebook employees trained developers like 643 to access data 7 the Conspiring Facebook Executives had already made the decision to restrict, encouraging and 8 enticing Developers to invest time, money and resources in applications Facebook knew would 9 not function based on decisions Zuckerberg had already made. Facebook made some of these 10 training sessions available online for Developers like 643 who could not attend in person. 643 11 relied on these training sessions and other statements in deciding and continuing to invest in its 12 technology. Facebook continued to make the same representations around the benefits of 13 Facebook Platform that it had made since 2007 and acted maliciously, intentionally and 14 recklessly in continuing to make such statements. Further, from 2012 throughout 2014, Facebook 15 issued numerous official statements and announcements that touted the success of Developers on 16 Facebook Platform and further encouraged Developers to invest resources to build applications 17 around data Zuckerberg had already decided to stop providing on fair, equal and neutral terms. 18 115. By way of example, on June 20, 2012, Cox gave a keynote speech at a conference 19 in which he touted the success of a company that accessed friend data when stating: "And on 20 Ticketmaster, rather than trying to remember exactly which night your friends were going to the 21 concert ... people can see that right there [on Ticketmaster] and then post back that they're going, 22 which incidentally on average creates six extra dollars of spend on Ticketmaster." 23 (https://www.youtube.com/watch?v=R2kkaDMAJmA). Upon information and belief, such 24 statements by Cox were deliberately misleading, reckless and/or negligent in enticing Developers 25 to build similar applications to achieve the kinds of benefits Cox attributed to Ticketmaster since 26 Cox was in discussions with the Conspiring Facebook Executives to restrict this data. 27 28 50 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 116. By way of example, on October 20, 2012, Zuckerberg gave a speech in which he 2 stated that Facebook had "over 300 or 400 million photos shared per day now, which is pretty 3 crazy," and implied that photo sharing was a huge monetization opportunity on Facebook. 4 Zuckerberg omitted any mention that he had, upon information and belief, already decided to 5 restrict this data to Developers. (https://www.youtube.com/watch?v=5bJi7k-y1Lo). Further, on 6 January 15, 2013, Zuckerberg described searching for photos extensively and noted that 7 Facebook had over 240 billion photos, the largest online repository, conveniently omitting that 8 access to such photos would be restricted when enticing listeners around the opportunity of 9 Facebook's photo platform. (https://www.youtube.com/watch?v=c-E3cfPHjeY). 10 117. By way of example, on February 28, 2013, Facebook published a training video on 11 its official Facebook Developer YouTube Channel 12 (https://www.youtube.com/user/FacebookDevelopers/about), which has over 80,000 subscribers 13 and 9.8 million views. The training session, "Getting started with Facebook SDK for iOS," was 14 hosted by Facebook Employee Eddie O'Neil. O'Neil teaches Developers how to build 15 applications that access friend data by building one with the Developers in the audience. He 16 shows how to make a request to "get back photo albums for five friends" and then towards the 17 end shows the finished application, stating: "Here are all my friends ... As I scroll here, you see 18 that we haven't brought all the friend pictures in yet, but as we bring them in we'll stick them in 19 that cache and hold on to them ... when we come back to display this it's instantaneous," meaning 20 that the App can show all the friends' photos in a single request to make it super easy for 21 Developers to use this data in their applications. 22 (https://www.youtube.com/watch?v=t51FzjDCYM4). Upon information and belief, Zuckerberg 23 had already decided to restrict access to friend data many months prior, and Mr. O'Neil was 24 aware of this fact at the time he held this training session. As a result, Mr. O'Neil must have 25 known at the time of this training session that he was teaching and encouraging Developers to 26 invest capital and resources in building applications that would soon no longer function. Upon 27 information and belief, the Conspiring Facebook Executives either instructed Mr. O'Neil directly 28 51 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 or via their subordinates to actively conceal this information from Developers. 643 reasonably 2 relied on this training video and others like it when making decisions to continue its investment in 3 Facebook Platform. 4 118. By way of example, February 28, 2013, Facebook published another training video 5 on its official Facebook Developer Y ouTube Channel. This training video was hosted by 6 Facebook employee Simon Cross from the "World Hack Moscow" event. Cross tells Developers 7 that Facebook Platform is not about building apps within Facebook.com but rather integrating 8 Facebook data "into your app on every platform ... We're gonna spend time using our SDKs and 9 APis and integrating with Facebook at a code level." Cross then walks Developers step by step 10 through the process of accessing photos ("Now we can go in and get their picture"). 11 (https://www.youtube.com/watch?v=heTPmGb6jdc) 12 (https://www.facebooksappeconomy.com/fullstory, around 11 :00). Upon information and belief, 13 Zuckerberg had already decided to restrict access to friend data many months prior, and Mr. 14 Cross was aware of this fact at the time he held this training session. As a result, Mr. Cross must 15 have known at the time of this training session that he was teaching and encouraging Developers 16 to invest capital and resources in building applications that would soon no longer function. Upon 17 information and belief, the Conspiring Facebook Executives either instructed Mr. Cross directly 18 or via their subordinates to actively conceal this information from Developers. 643 reasonably 19 relied on this training video and others like it when making decisions to continue its investment in 20 Facebook Platform. 21 119. By way of example, on June 20, 2013, Facebook published another training video 22 hosted by Cross on its official Facebook Developer Y ouTube Channel, "Getting Started with 23 Graph API". The video included instructions stating that its purpose was to serve as "An 24 introduction to Facebook's Graph API which is the primary way to programmatically integrate 25 with Facebook- publishing Open Graph stories, Teading data about the current user - their 26 detai ls, their likes and interests and fri ends." The video documentation further states that it will 27 show Developers "ho w to build u p deep graph queries which dive several layers deep into the 28 52 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Graph." The instructions also reference Developer documentation that continued to show 2 Developers how to access data that the Conspiring Facebook Executives had already decided to 3 restrict at: https://developers.facebook.com/docs/graph-api/overview. Notably, despite this 4 reference by Facebook in June 2013 to this URL, the Wayback Machine has no record of this 5 URL prior to 2015 after Facebook had made public its bait-and-switch schemes. In the video, 6 Cross walks Developers from start to finish through the process of requesting friend data 7 permissions, enticing Developers with statements like the following: "Grapb API Explorer makes . 8 it really easy to get started .. . Places, Pages, Photos, Events and Newsfeed stories as well as Users 9 are all considered objects" in the graph .... We can go deeper and deeper into the graph. We can 10 also request the picture connection on each returned User object. This would allow me to show 11 the profile picture of each of my friends and to get all of this data in a single request." 12 (https://www.youtube.com/watch?v=WteK95AppF4). Developers watched this video 238,665 13 times as of March 7, 201 7. Upon information and belief, Zuckerberg had already decided to 14 restrict access to friend data many months prior, and Mr. Cross was aware of this fact at the time 15 he held this training session. As a result, Mr. Cross must have known at the time of this training 16 session that he was teaching and encouraging Developers to invest capital and resources in 17 building applications that would soon no longer function. Mr. Cross actively concealed and 18 omitted material facts around restrictions on this data that Facebook already decided upon around 19 one year prior. Upon information and belief, the Conspiring Facebook Executives either 20 instructed Mr. Cross directly or via their subordinates to actively conceal this information from 21 Developers. 643 reasonably relied on this training video and others like it when making decisions 22 to continue its investment in Facebook Platform. 23 120. By way of example, on June 26, 2013, Facebook published a "Facebook Platform 24 Case Study- Fab.com" on its official Facebook Developer YouTube Channel. Facebook and its 25 partner Fab.com, an e-commerce app, touted the benefits ofbuilding on Facebook's social 26 operating system. A Fab.com employee stated that with Graph API they can "take everything 27 they have in the catalog and narrowly target to a customer" to "see a product on Facebook and 28 53 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 then share with their friends." Facebook entices Developers to access social data in this video but 2 conveniently omits all reference to the fact that the Conspiring Facebook Executives had decided 3 many, many months ago to cease providing this data on fair and neutral terms. 4 (https://www. youtube.com/watch?v=fEvq 5BshZLo ). 5 121. By way of example, on September 18, 2013, Zuckerberg gave a speech during one 6 ofFacebook's Developer Days to over 600 attendees from 17 countries. Facebook published the 7 speech on its official Facebook Developer YouTube Channel. Zuckerberg states: "A lot of people 8 think about Facebook Platfonn as a way t0 get distribution for apps that you ve built. But we 9 want to help you do even more than that. We want to make it simple to build great apps that have 10 identity, friends and all the stuff that you want built in really easily." 11 (https://www.youtube.com/watch?v=rnnjQpyCJec). Upon information and belief, Zuckerberg had 12 decided approximately a year earlier to restrict access to friends data, identity data and "all the 13 stuff that you want built in really easily." Upon information and belief, Zuckerberg intentionally, 14 recklessly and/or negligently made this statement and many others like it during this period of 15 time to induce Developers to build applications that benefited Facebook with full knowledge that 16 Developers' investments in these applications would be irreparably damaged. Upon information 17 and belief, Zuckerberg actively concealed his decision, made statements that plainly contradicted 18 his decision, and omitted material information regarding his decision. 643 reasonably relied on 19 Zuckerberg's intentional, reckless and/or negligent false statements and had no other means of 20 identifying this material information that the Conspiring Facebook Executives had been actively 21 concealing even before 643 received its initial investment and began its operations. 22 122. During this time from 2012 throughout 2014, Facebook made many other policy 23 updates and announcements to keep Developers informed of material information, including 24 announcements on its website and in videos, such as the "Facebook Policy Update" by Facebook 25 employee Alison Hendrix published on Facebook's official YouTube Channel on August 27, 26 2013. (https://www.youtube.com/watch?v=NRziLMgbbOk). Even as late as September 2014, 27 Facebook continued to actively conceal material facts related to its photo sharing applications, as 28 54 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Facebook's users (those who were friends with 643's users) would generate economic benefit for 2 643 in the future. 3 93. On December 11, 2012, 643 entered into Facebook's Statement of Rights and 4 Responsibilities ("SRR" or "Agreement"). The SRR is the "terms of service that governs 5 [Facebook's] relationship with users and others who interact with Facebook. By using or 6 accessing Facebook, [643] agree[ d) to this Statement .... " (FB _0000006, FB _0000017). Further, 7 since 643 had "a principal place of business in the US or Canada, this Statement is an agreement 8 between [643] and Facebook, Inc." (FB_0000015, FB_0000025). 9 The primary consideration offered by Facebook is described as follows in the 94. 10 Agreement: "We give you all rights necessary to use the code, APis, data, and tools you receive 11 from us." (FB_OOOOOlO, FB_0000021). In exchange, 643 gave Facebook various rights and other 12 forms of valuable consideration, including, for instance, the right to issue "a press release 13 describing [Facebook's] relationship with [643]," the "right to analyze [643's] application, 14 content, and data for any purpose, including commercial" purposes like targeting advertisements. 15 (FB_OOOOOlO, FB_0000021). In other words, 643 gave Facebook the right to leverage the user 16 engagement from 643's App to increase Facebook's advertising revenues. 17 In consideration of the rights to access Facebook's data, 643 also committed to a 95. 18 wide range of obligations around which it incurred substantial cost, such as ensuring that 643 19 would "provide customer support for its application," "make it easy for users to contact" 643 or 20 "remove or disconnect" 643's App (FB_0000010, FB_0000021). A small sample ofthe 21 additional requirements Facebook placed on 643, many of which required incurring costs, are 22 listed below: 23 24 25 26 27 28 a. You will not collect users' content or information, or otherwise access Facebook, using automated means (such as harvesting bots, robots, spiders, or scrapers) without our prior permission. b. You will not engage in unlawful multi-level marketing, such as a pyramid scheme, on Facebook. c. You will not upload viruses or other malicious code. 41 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 information that made it impossible for 643 and other Developers to understand the impact to 2 their applications based on Zuckerberg's convoluted and contradictory announcement on April 3 30, 2014. Upon information and belief, Sukhar, Vernal and others worked directly with 4 Zuckerberg to suppress this material information in the announcement and to disseminate this 5 fabricated narrative around user trust. 127. 6 Upon information and belief, Zuckerberg tasked Sukhar and Vernal, among others, 7 with propagating this fraudulent narrative internally to Facebook employees and externally to 8 Developers and the public. Upon information and belief, Sukhar, Vernal and the other Conspiring 9 Facebook Executives actively participated and conspired in the propagation of this fraudulent 10 narrative. 128. 11 Upon information and belief, issues like user trust, user control, privacy and the 12 rare use of certain Graph API data- all of which Zuckerberg and other Facebook employees 13 stated publicly as reasons for restricting data access and breaking tens of thousands of 14 applications - were not in fact the actual reasons for restricting data access at the time Zuckerberg 15 made and the Conspiring Facebook Executives participated in the decision. Upon information and 16 belief, removing potential competitive threats and leveraging Platform to build Facebook's 17 mobile advertising business were the primary or exclusive reasons for closing the Open Graph. 18 Further, upon information and belief, decisions were not made unilaterally but in combination and 19 concert with other large companies and exceptions were made for certain applications that are 20 more susceptible to violating user trust or where user trust is in fact more important than in 21 normal applications, such as applications that require payments. These exceptions demonstrate 22 that user trust could not have been the actual reason for Facebook's decision to restrict Graph API 23 data. 24 129. Upon information and belief, Zuckerberg and the Conspiring Facebook Executives 25 directed their public relations team to feed reporters false information and in certain cases drafted 26 reporters' stories themselves in order to disseminate this fabricated narrative among the public 27 and Developer community. 28 56 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 130. In his announcement at F8 on April30, 2014, Zuckerberg continued to conceal 2 material facts, reveal only partial information, and deliberately mislead Developers and the 3 public. Zuckerberg announced during his keynote: "Thjs is gonna be a different kind ofF8. In the 4 past we ve had F8 wh en we've had a big product announcement or new direction we were going 5 in. Thi s always meant a lot of different changes for your apps. Now we're focused on building a 6 stable mobile platform. You're trying to build great mobile apps and businesses. And we want to 7 bring this community together once per year to talk about all the different things were doing to 8 support you. We ve heard fi:om you that you want to use Facebook Platform to do 3 thi ngs. Hel p 9 you bui ld, grow and monetize your apps." 10 131. Thus, Zuckerberg reiterated the representation that Facebook had expressed to 11 Developers unequivocally for over seven years now: that Facebook is committed over the long- 12 term to helping them build, grow and monetize their apps. 13 132. Zuckerberg continued: "As I said we're really focused on building a stable mobile 14 platform. And one thing you may not know, is that all of our mobile apps are built on top of the 15 very same platform and APis that you guys use when you're writing Facebook and all our 16 engineers use the same tools and read all the same documentation that you do .... It's really 17 important for you and for all of our teams internally that we build stable and efficient 18 infrastructure that you can rely on for the long term. So this has been a really big focus for us .... I 19 want to start today by going through a few things we're doing to make our platform even more 20 stable and reliable for you to build, grow and monetize your apps. You want to be able to build 21 something and know that it's gonna be able to work for a while. So today for the first time we're 22 introducing a 2-year stability guarantee for all of our core API platforms ... so even if we change 23 these core AP ls in the future, we re guaranteeing that were goin g to keep supporting them as is 24 for at least two years and maybe longer from the time we make that change. Were stil.l gonna 25 experiment with new features and different thi ngs but we're gonna mark them as beta so you 26 know what' s gonna be part of this core stable platform. We re also introducing AP f versioning. 27 This is somethin g we want to make sure that all the apps we wrote two years ago keep working. 28 57 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Thi s is something we wanted internally as we build on this plat orm, so now everything is g01ma 2 be ver ioned so you get to decide which version of the API you get to build against." 3 133. Accordingly, Zuckerberg made at least four representations of fact: (1) Facebook 4 continued to provide a level playing field to Developers, including the ability to use the same 5 tools as Facebook employees to develop their applications; (2) Facebook continued to be 6 committed to providing developer access "that you can rely on for the long term"; (3) Facebook 7 promised that for all of its Core API endpoints it would guarantee their stability for at least two 8 years going forward; (4) Facebook promised that it would let Developers choose which version of 9 the API they would like to access as it introduces API versioning ("This is something we want to 10 make sure that all the apps we wrote two years ago keep working. This is something we wanted 11 internally as we build on this platform, so now everything is gonna be versioned so vou get to 12 decide which version of the API you get to build against."). 13 134. Because Zuckerberg suppressed material facts in his announcement, many 14 Developers initially applauded the 2-year stability guarantee and the ability to let Developers 15 choose which version of the API to build against. One blogger applauded Facebook's 16 commitment to Developers in noting: "Facebook co-founder and CEO Mark Zuckerberg 17 announced a two-year stability guarantee for all of the company's core APis and platforms. In 18 fact, every API launched by Facebook will now be versioned, and Developers will be able to 19 choose which version to build on." (See http:/lthenextweb.com/facebook/2014/04/30/facebook- 20 announces-two-year-stability-guarantee-core-apis-sla-fix-major-bugs-within-48-hours/#gref.) 21 TechCrunch and many other bloggers also reported on the API Guarantee, stating that Developers 22 "will be able to build with confidence knowing that a Core API will be available for at least two 23 years". (See http:/!techcrunch.com/2014/04/30/facebook-api-guarantee/.) 24 135. Upon information and belief, Zuckerberg's announcement contradicted active 25 plans Facebook had been implementing for almost two years at Zuckerberg's personal direction. 26 At no time in his announcement did Zuckerberg mention that all of the Graph API Data would be 27 removed, notwithstanding that he had made the decision to do so two years prior and had 28 58 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 personally overseen efforts by dozens ofFacebook employees to implement the anti-competitive 2 data restrictions. 3 136. Zuckerberg's statement that Developers, like Facebook employees, would be able 4 to choose which API to use was simply false, and Zuckerberg knew this statement to be false at 5 the time he made it. Upon information and belief, the Conspiring Facebook Executives had 6 instructed their subordinates to implement a Core versus Extended API distinction and to version 7 Graph API precisely to hide both the type of data they intended to restrict while also masking the 8 true anti-competitive motivations for restricting it. 9 137. Zuckerberg's statement and Facebook's subsequent announcement that certain 10 endpoints would be removed because they were rarely used was false, and the Conspiring 11 Facebook Executives knew them to be false at the time they made them. Upon information and 12 belief, certain of the endpoints in question were among the most used data in Graph API. 13 138. Zuckerberg's statement of a two-year stability guarantee was also false, and 14 Zuckerberg knew it to be false at the time he made it. Upon information and belief, Zuckerberg 15 and the Conspiring Facebook Executives had already decided that the social data in the Social 16 Graph would only remain available for one year, not two. In other words, the 2-year stability 17 guarantee turned out not to apply to the original Graph API and only to future APis, a critical fact 18 that Zuckerberg omitted in his announcement. Thus, Facebook pulled the rug out from under the 19 Developer community and took full economic advantage of the ecosystem Developers had built, 20 but Zuckerberg's keynote address still generated sound bites consistent with his previous 21 representations that Facebook was maintaining a fair and level playing field for Developers. 22 Zuckerberg was forced to make statements he knew at the time to be false precisely because it 23 was obvious to everyone in the Developer community, especially Zuckerberg, that Facebook had 24 for seven years been making clear and unambiguous promises to Developers that they could rely 25 on Facebook Platform over the long term to provide a fair playing field that offers its data on 26 equal and neutral terms. 27 28 59 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 139. Finally, Graph API explicitly removed endpoints that were of high value to 2 Developers, like the ability to access photos, which for years Facebook had touted as one of its 3 most valuable and highly trafficked features in order to entice developers to build applications. 4 Facebook's only justification for removing access to photos at that time was that this endpoint 5 was "rarely used", which contravenes every public statement Facebook had previously stated for 6 over seven years in which Photos were consistently touted as its #1 application and driver of user 7 engagement, an application that captured more photos and traffic than the next three photo sites 8 on the Internet combined. Upon information and belief, these purportedly rarely used endpoints 9 were in fact among the most widely used in Facebook Platform from at least 2012 through 2014. 10 140. Facebook's behavior of intentionally inducing Developers to build Facebook's 11 business and then pulling the rug out from under them is a repeated pattern in Facebook's growth 12 story, further demonstrating the malicious, oppressive and fraudulent nature ofFacebook's 13 conduct. The alleged conduct is not an isolated incident simply related to Graph API versioning 14 and the thousands of developers, like 643, whose businesses were destroyed by this bait-and- 15 switch tactic. 16 141. By way of example, Facebook executed another bait-and-switch tactic that caused 17 thousands of Developers to go out of business and lose countless millions of dollars of enterprise 18 value and capital investment. At the same time that Zuckerberg pulled the rug out from 19 Developers using Graph API data at F8 2014, he also announced Facebook's acquisition and 20 reliance on Parse as its new preferred tool for developers to build on Facebook Platform. Parse 21 was a popular development platform for creating applications for Facebook, which handled much 22 of the back -end functionality of such applications, allowing Developers to focus on features that 23 matter to users. Zuckerberg stated in the same keynote where he announced the Graph API 2.0: 24 "One ofthe things we're really excited about offering is Parse ... We make it easy to focus on your 25 app, the thing that will get you users and make you money ... and Parse takes care of all the rest." 26 A Facebook employee who followed Zuckerberg on stage went on to note that they had expanded 27 the free tier to make it easier to grow on Parse, giving developers "unlimited requests, unlimited 28 60 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 exclusive access to this information and had taken measures to actively conceal this fact from 2 643, other Developers and the public. 104. 3 643 conducted user research to determine how people would like their photos 4 sorted. The user research overwhelmingly concluded that users between the ages of 25 and 45 5 wanted to more easily find photos of their friends in a summer setting. Consequently, 643 decided 6 to test its technology by building an application called Pikinis ("the App"). The App was 7 available for download on any iOS-compatible device, including the iPhone and iPad. The App 8 enabled Facebook users to reduce time spent searching through their photos by automatically 9 finding summer photos that their friends have shared with them through Facebook's network, 10 assuming their friends permitted 643 to access the photos. This App enabled 643 to more rapidly 11 access large numbers of photos in order to train its technology and develop new and more 12 powerful applications in order to convert prospective customers. 643 also had plans to develop an 13 Android version of the App in order to convert prospective customers who owned Android 14 phones. 15 105. The App required use ofFacebook's Graph API. The App used 643's image 16 recognition technology to search through shared photos and identify the ones in a summer setting, 17 which included friends at the beach or pool, on a boat, in their bathing suits and the like. 643 had 18 intended to use its technology to build a number of other applications unrelated to the subject 19 matter of the App. 20 106. The App could only access and display photos that Facebook users had chosen to 21 share based on their Facebook privacy settings, even if the Facebook user had never installed 22 643 's App. In other words, the only photos a user could see in the App were ones the user could 23 also see on Facebook. 643's App had no photos that were not also displayed on Facebook.com. 24 All the photos and all content in the App was subject to and passed Facebook's own policy, 25 privacy and content reviews. It was not possible for the App to display content that was not 26 subject to and had not passed Facebook's own policy, privacy and content reviews. Therefore, it 27 was not possible for the App to contain objectionable content as all of the content was subject to 28 46 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 and controlled by Facebook's own policies, including its manual and automated controls. If a 2 photo were to be removed by Facebook for containing objectionable content, it would have 3 simultaneously and automatically been removed from the App. 643 made this clear to customers 4 and prospective customers of the App. 5 107. 643 conducted initial user research that indicated considerable consumer demand 6 for the App, among both men and women. Facebook never expressed any disapproval of the App 7 as the only content it accessed was content already available on Facebook. The App abided by the 8 Agreement, including all ofFacebook's privacy requirements, Terms and Conditions and 9 Developer Policies. The App built in advanced privacy checks at significant engineering expense. 10 The App contained no malicious or inappropriate content, and any Facebook user could remove 11 the App's access to their photos at any time from the main Facebook privacy page. 12 108. 643 made plans to market and promote the App to attract users. 643 engaged at 13 least 20 contractors at significant cost to assist in building a list of prospective customers, mostly 14 students on college campuses. These contractors used publicly available information and/or direct 15 outreach to develop a list of prospective customers with verified unique email addresses in excess 16 of 100,000 prospective customers (approximately 49,000 fraternity members, 23,000 sorority 17 members, and 35,000 female and male college athletes). Further, 643 sent emails to some but not 18 all of these prospective customers. The emails invited these prospective customers to go onto the 19 App's website and sign up to receive a notification once the App launched and was available for 20 them to purchase. These emails were sent in batches that had an average conversion rate of 6%, 21 significantly higher than the industry norm (the lowest conversion rate was approximately 3% and 22 the highest was approximately 13%). Approximately 6,000 people opted-in to receive a 23 notification from 643 when the App was available for them to purchase. In other words, 6,000 24 people took the time to go to the App's website, input their email address and request that they be 25 notified when the App launched. These individuals who signed up to receive a notice when they 26 could purchase the App were qualified prospective customers who had expressed intent to 27 purchase 643 's App and had an existing relationship with 643 by signing up to the App's website 28 47 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 entered into economic relationships with 4,481 users who downloaded the App in a very short 2 period of time with virtually no marketing budget. A substantial portion of App users subscribed 3 to premium access that began generating monthly revenues for 643. 4 150. Each one ofthe App users entered into a license agreement with 643. 5 151. Facebook requires Developers to enter into license agreements with users of 6 applications for Facebook. These license agreements must, among other things, require that the 7 users ofthese applications adhere to Facebook's terms of service. 8 9 152. Accordingly, Facebook knew, or should have known, about the existence of643's license agreements with its users, since Facebook required 643 according to the terms of its 10 Agreement to enter into such license agreements with 643's users. Further, upon information and 11 belief, Facebook employees, Zuckerberg and the Conspiring Facebook Executives circulated 12 spreadsheets of businesses who would be severely impacted by the anti-competitive data 13 restrictions. Upon information and belief, 643 's App appears in these spreadsheets circulated 14 among Facebook executives, including Zuckerberg. Upon information and belief, the 15 overwhelming majority of the businesses on these spreadsheets were good apps who did not 16 violate user privacy or trust and to which Facebook had never sent a notice of policy violation. 17 153. Had Facebook refrained from restricting Graph API data, 643 could have quickly 18 begun to generate hundreds of thousands of dollars of revenue on a monthly basis. In a survey of 19 its initial trial users, 643 determined that there was overwhelming interest and engagement from 20 users of the App. In response to its survey, 96% of users said the App was easy to use and 21 understand; 75% of users said they were likely to recommend the App to a friend, with 40% 22 saying they already had recommended the App to a friend; 72% said they were happy with the 23 results returned from their searches; 32% said they would use the App every day while 67% said 24 they would use it once in a while; 60% of users said they would pay for the App, with 7% saying 25 they would pay $2.99, 21% saying they would pay $1.99, and 32% saying they would pay $0.99; 26 and 32% said they would pay for an ongoing subscription to run additional searches. 27 28 63 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 154. In total, 643 expended capital and uncompensated labor by its team members in 2 developing and marketing the App in the high six or low seven figures in an amount to be 3 determined at trial. The value of the outstanding shares of ownership interest in 643 at the time 4 Facebook notified 643 that it's App would no longer function was $4,081,950 based on the 5 established price per purchased share. 643 's lost profits under conservative growth assumptions 6 over a five-year period and without incorporating additional applications 643 may have decided 7 to build is estimated at $88,193,389. 8 155. After Facebook notified 643 its App would no longer function on January 20, 9 2015,643 attempted to contact Facebook to make known the harm. Facebook ignored 643's 10 attempts to engage in productive conversation regarding this harm. Faced with the imminent loss 11 of its investment, 643 wrote to Facebook on March 16, 2015, and informed Facebook that its 12 decision to discontinue access to the Graph API Data would harm 643 in several ways. 643 13 informed Facebook that it had reasonably relied on Facebook's representations and partial 14 disclosures for over seven years. 643 requested that Facebook continue to permit Developers to 15 access the Graph API Data. 16 156. 643 alerted Facebook to the considerable harm it would suffer should access be 17 removed. 643 also noted that some of its users had entered into subscriptions that extend beyond 18 the April 30, 2015, cut-off date, and that these users could be entitled to refunds of their 19 purchases. 20 157. Thus, Facebook had actual knowledge ofthe contracts 643 had entered into with 21 its users. In addition, Facebook had actual knowledge ofthe prospective economic relationships 22 643 expected with its users, as well as Facebook users generally. 23 158. On or about April30, 2015, Facebook ended Developer access to the Graph API 24 Data, including photos data, to all companies except those that entered into separate agreements 25 with Facebook for special access, which, upon information and belief, was typically only granted 26 once those companies also agreed to make unrelated advertising purchases or provide other 27 valuable consideration. 28 64 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 2 159. As a result ofFacebook restricting access to Graph API, the App no longer functioned and could not be made to function. 3 4 160. Upon information and belief, Facebook has been working on its own applications using image recognition and photo and video sharing. 5 161. On June 15, 2015, less than two months after restricting Graph API access, 6 Facebook announced the launch of"Moments," which allows users to "sync" photos they have 7 taken with their friends and, using Facebook's facial recognition software, allows users to search 8 photos that their friends have shared with them. See 9 http:l/newsroom.fb.com/news/2015/06/introducing-moments/ (last accessed October 27, 2015). 10 This Moments application is directly competitive with 643 's App. 11 162. Instagram is an online photo sharing service that Facebook acquired in 2012, 12 around the time it decided, upon information and belief, to implement its fraudulent and anti- 13 competitive schemes. 14 163. In June 2015, just two months after Facebook closed access to the Friends' Photos 15 Endpoint, Instagram announced enhancements to its 'Search and Explore' features, which allow 16 users to search through photos that have been shared with that user on Instagram. Instagram is 17 directly competitive with 643's App. 18 164. In 2016, Facebook launched Facebook Live, its video sharing service which allows 19 users to take and share videos with their friends. Facebook Live is directly competitive with 643 's 20 App. 21 22 165. Upon information and belief, in addition to 643, other Developers have been adversely impacted by Facebook restricting access to Graph API Data. 23 166. On September 21, 2015, the Wall Street Journal reported that Facebook's decision 24 to restrict access to Graph API has caused a drug addiction researcher to halt his research efforts, 25 shut down a voter-registration tool used by the 2012 Obama campaign, and decommissioned an 26 app designed to help first generation college students connect with one another. Deepa 27 Seetharaman & Elizabeth Dwoskin, "Facebook's Restrictions on User Data Cast a Long Shadow; 28 65 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Curbs disrupt startups, academic research and even political strategy"," THE WALL STREET J., 2 Sept. 22, 2015, at B1 (available at 3 http://www.wsj.com/articles/facebooksrestrictionsonuserdatacastalongshadow1442881332). 4 167. The Wall Street Journal also reported in the same article that Facebook reached an 5 unspecified compromise with dating app Tinder that permitted some form of access to photos of 6 mutual friends. Upon information and belief, Tinder provided highly valuable unrelated financial 7 consideration to Facebook in exchange for this special access to data. 8 168. Upon information and belief, Facebook entered into agreements with many large 9 companies with the financial wherewithal to make substantial payments in unrelated advertising 10 purchases on Facebook in order to continue to maintain access to data that Facebook promised 11 would be available to all companies on fair and neutral terms. Upon information and belief, these 12 companies combined, conspired and agreed to work with Facebook to restrict access to social 13 data within specific vertical markets within Facebook Platform, such as dating, photo sharing, 14 messaging, lifestyle, news, books, games, videos and e-commerce applications. 15 169. Because 643 is a small business with limited resources, Facebook never offered 16 643 a compromise that would permit the App to function and even if Facebook were to make 17 such an offer, the harm to 643 is irreparable as its team members have moved on to new 18 employment and its code has been fully retired. 19 170. Instead, the only proposed technical "fix" by Facebook was to create an offline, 20 searchable cache ofFacebook's users' photos. But this solution (1) on its face violates 21 Facebook's own terms, (2) would not permit the App to function as originally intended and in the 22 same manner it had been, and (3) could result in a grave and substantial abuse of user trust, 23 violate user privacy, and gut the core principle of an individual's ownership and control of their 24 own data. Facebook only offered this "fix" after multiple communications from 643 's counsel 25 providing notice to Facebook of 643 's intention to commence this litigation. 26 171. Facebook did not restrict Graph API data for the purpose of enhancing user 27 privacy, as users already possessed complete control over such data. Instead, it took these actions 28 66 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 for the purpose of improperly oligopolizing for itself and other large companies various attractive 2 software markets. As a result of these actions, users now have less control over this data. They are 3 not permitted to share it with other applications they trust, but only with Facebook and a small 4 group of companies that pay Facebook large sums of money in unrelated advertising purchases or 5 other financial consideration of strategic value to Facebook. 6 172. As set forth above, Facebook and certain of its executives made repeated, clear and 7 unambiguous representations and partial disclosures of fact upon which many Developers, 8 including 643, reasonably relied, over a period of more than seven years. Facebook and certain of 9 its executives knew or should have known these representations were false at the time they made 10 them, but continued to make these representations intentionally, recklessly, maliciously, 11 oppressively and fraudulently with complete disregard for the impact they would have on tens of 12 thousands ofbusinesses and the families that depend upon them. 13 173. As set forth above, Facebook and certain of its executives deliberately withheld its 14 decision to close access to data in its operating system for approximately two years and continued 15 to entice Developers, including 643, to invest capital and resources with the knowledge that such 16 investments would be irreparably damaged. 17 174. As set forth above, Facebook and certain of its executives then combined and 18 conspired with other large companies to oligopolize specific vertical markets by providing 19 unequal access to the Social Graph in exchange for these companies providing unrelated 20 advertising payments or other in-kind consideration to the extreme detriment of all other market 21 participants. 22 175. As set forth above, Facebook and certain of its executives, at the direction of 23 Zuckerberg, then concocted a completely fabricated narrative in order to mask their anti- 24 competitive and deceptive behavior that resulted in tens of thousands ofbusinesses facing 25 financial hardship and in some cases, like 643's case, shutting down. 26 27 28 176. Facebook and certain of its executives, in combination and concert with other large companies, deliberately baited, induced and enticed (through countless promises in both official 67 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 statements and policies and in its conduct) Developers to help tum Facebook from a website that 2 had raised $37 million and secured 24 million users to one of the most valuable enterprises in the 3 world, unjustly enriching Facebook and certain of its executives and their co-conspirators at the 4 expense of small and mid-size companies around the world. 5 COUNT I: VIOLATION OF BUSINESS AND PROFESSIONS CODE§§ 17200 et seq. [Against All Defendants] 6 177. 643 re-alleges and repleads paragraphs 1 through 176 as though set forth fully 7 herein. 8 178. Facebook's representations and conduct were designed to, and did, entice 643 and 9 other Developers to create applications for Facebook with representations of, among other things, 10 a level playing field, fair competition, and a chance to build a business. Facebook decided to open 11 Graph API and certain types of data, and not others, precisely to induce Developers to build 12 certain types of applications, including advanced photo-searching applications. Facebook 13 represented to Developers that their own advanced photo-searching applications would be treated 14 on a level playing field with any photo-searching applications Facebook decided to launch in the 15 future. Facebook also represented to developers that Facebook was committed over the long term 16 to enable Developers to build businesses using advanced photo-searching applications. 17 179. Facebook caused substantial harm to 643 and other Developers when it then 18 decided to terminate Developers' ability to build advanced photo-searching applications, while 19 retaining the ability to create these kinds of applications for itself and for its close partners, 20 because 643, like other Developers, had invested considerable capital and resources in developing 21 this kind of application for Facebook. 22 180. The efforts by 643 and other Developers helped to drive user adoption of 23 Facebook by enhancing user experience, thus creating substantial additional revenue and user 24 base for Facebook's benefit. 25 181. In addition, Facebook took advantage ofthe market research and development 26 efforts by 643 and other Developers, which proved that advanced photo-searching applications 27 28 represented a massive market, perhaps one of the most attractive markets to help Facebook grow 68 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 its revenues going forward, as evinced by Facebook's recent announcement of"Moments", its 2 own photo searching application (see "Facebook Moments is a Smarter Photo App- Much 3 Smarter, in Wired Magazine, June 15,2015, http://www.wired.com/2015/06/facebook- 4 moments/). 5 182. Facebook' s decision to restrict access to Graph API data does not enhance user 6 privacy because the App could only sort through photos that had already been shared with the 7 App user and the App user and the user's friends had full control over which, if any, Developers 8 were permitted to access their photos. 9 183. Instead, by restricting access to Graph API, Facebook has oligopolized for itself 10 and other large companies that entered into special agreements with Facebook the ability to create 11 applications capable of searching or sorting photos and other media, which harms consumers, 12 Developers, and competitors. 13 14 184. No countervailing benefits to competition or consumers stemming from Facebook's representations and conduct exist. 15 185. The harm to 643 and other Developers by Facebook's representations and conduct 16 outweighs the purported reasons, justifications, or motives for the representations and conduct by 17 Facebook. 18 186. 643 could not have reasonably avoided its injury because Facebook notified 643 it 19 would be restricting data access after 643 had made considerable investment and Facebook had 20 approved the App. 21 22 23 24 25 26 187. 643 also requested that Facebook not restrict Graph API data, but Facebook did not change its decision. 188. Facebook's actions thus constituted an unfair business practice under California's Unfair Business Practices Act. 189. Facebook's decision to restrict Graph API data and provide it on unequal terms was also unlawful. 27 28 69 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 Graph." The instructions also reference Developer documentation that continued to show 2 Developers how to access data that the Conspiring Facebook Executives had already decided to 3 restrict at: https://developers.facebook.com/docs/graph-api/overview. Notably, despite this 4 reference by Facebook in June 2013 to this URL, the Wayback Machine has no record of this 5 URL prior to 2015 after Facebook had made public its bait-and-switch schemes. In the video, 6 Cross walks Developers from start to finish through the process of requesting friend data 7 permissions, enticing Developers with statements like the following: "Grapb API Explorer makes . 8 it really easy to get started .. . Places, Pages, Photos, Events and Newsfeed stories as well as Users 9 are all considered objects" in the graph .... We can go deeper and deeper into the graph. We can 10 also request the picture connection on each returned User object. This would allow me to show 11 the profile picture of each of my friends and to get all of this data in a single request." 12 (https://www.youtube.com/watch?v=WteK95AppF4). Developers watched this video 238,665 13 times as of March 7, 201 7. Upon information and belief, Zuckerberg had already decided to 14 restrict access to friend data many months prior, and Mr. Cross was aware of this fact at the time 15 he held this training session. As a result, Mr. Cross must have known at the time of this training 16 session that he was teaching and encouraging Developers to invest capital and resources in 17 building applications that would soon no longer function. Mr. Cross actively concealed and 18 omitted material facts around restrictions on this data that Facebook already decided upon around 19 one year prior. Upon information and belief, the Conspiring Facebook Executives either 20 instructed Mr. Cross directly or via their subordinates to actively conceal this information from 21 Developers. 643 reasonably relied on this training video and others like it when making decisions 22 to continue its investment in Facebook Platform. 23 120. By way of example, on June 26, 2013, Facebook published a "Facebook Platform 24 Case Study- Fab.com" on its official Facebook Developer YouTube Channel. Facebook and its 25 partner Fab.com, an e-commerce app, touted the benefits ofbuilding on Facebook's social 26 operating system. A Fab.com employee stated that with Graph API they can "take everything 27 they have in the catalog and narrowly target to a customer" to "see a product on Facebook and 28 53 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 then share with their friends." Facebook entices Developers to access social data in this video but 2 conveniently omits all reference to the fact that the Conspiring Facebook Executives had decided 3 many, many months ago to cease providing this data on fair and neutral terms. 4 (https://www. youtube.com/watch?v=fEvq 5BshZLo ). 5 121. By way of example, on September 18, 2013, Zuckerberg gave a speech during one 6 ofFacebook's Developer Days to over 600 attendees from 17 countries. Facebook published the 7 speech on its official Facebook Developer YouTube Channel. Zuckerberg states: "A lot of people 8 think about Facebook Platfonn as a way t0 get distribution for apps that you ve built. But we 9 want to help you do even more than that. We want to make it simple to build great apps that have 10 identity, friends and all the stuff that you want built in really easily." 11 (https://www.youtube.com/watch?v=rnnjQpyCJec). Upon information and belief, Zuckerberg had 12 decided approximately a year earlier to restrict access to friends data, identity data and "all the 13 stuff that you want built in really easily." Upon information and belief, Zuckerberg intentionally, 14 recklessly and/or negligently made this statement and many others like it during this period of 15 time to induce Developers to build applications that benefited Facebook with full knowledge that 16 Developers' investments in these applications would be irreparably damaged. Upon information 17 and belief, Zuckerberg actively concealed his decision, made statements that plainly contradicted 18 his decision, and omitted material information regarding his decision. 643 reasonably relied on 19 Zuckerberg's intentional, reckless and/or negligent false statements and had no other means of 20 identifying this material information that the Conspiring Facebook Executives had been actively 21 concealing even before 643 received its initial investment and began its operations. 22 122. During this time from 2012 throughout 2014, Facebook made many other policy 23 updates and announcements to keep Developers informed of material information, including 24 announcements on its website and in videos, such as the "Facebook Policy Update" by Facebook 25 employee Alison Hendrix published on Facebook's official YouTube Channel on August 27, 26 2013. (https://www.youtube.com/watch?v=NRziLMgbbOk). Even as late as September 2014, 27 Facebook continued to actively conceal material facts related to its photo sharing applications, as 28 54 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 evinced in a video published on its official Facebook Y ouTube Channel, "Facebook Products for 2 Photo Apps," which makes no mention of the dramatic restrictions on friend data and photos data 3 that, upon information and belief, the Conspiring Facebook Executives had decided to implement 4 more than two years prior. (https://www.youtube.com/watch?v=R8M4oz1uA3o). 5 123. Further, upon information and belief, throughout 2013 and 2014, the Conspiring 6 Facebook Executives combined and conspired with other companies to selectively enforce 7 Zuckerberg' s decision to shut down access to Graph data against certain companies that built 8 applications which the Conspiring Facebook Executives considered especially competitive with 9 Facebook's current or future products. Upon information and belief, the Conspiring Facebook 10 Executives agreed to wait to restrict access to certain other companies and encouraged these 11 companies to continue investing in applications that the Conspiring Facebook Executives knew 12 would not function in the future. 13 VIII. 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 F_ROM LATE 2013 TO EARLY 2014, ZUCKERBERG CONCOCTED A FABRICATED NARRATIVE TO MASK THE FRAUDULENT AND ANTICOMPETITIVE SCHEMES IN WHICH HE AND THE OTHER DEFENDANTS CONSPIRED, SUPPRESSING MATERIAL INFORMATION AND SHARING ONLY PARTIAL INFORMATION, WHICH CAUSED FURTHER DAMAGE TO 643. 124. From late 2013 through early 2014, Zuckerberg worked with the Conspiring Facebook Executives and other companies to construct a fraudulent narrative around 'user trust' designed to mask the true reasons he decided to close access to Facebook's allegedly Open Graph. Upon information and belief, Zuckerberg personally decided to announce the closing of Graph API at F8 on April 30, 2014 and personally drafted his speech that actively, maliciously and fraudulently suppressed material information and revealed only partial information. 125. Upon information and belief, Zuckerberg personally decided to make user trust and control a theme at F8 and use those themes as pretenses for notifying companies that their access to data would be removed. 126. Upon information and belief, Zuckerberg personally decided to mask the true implications of his decision to restrict data access in his announcement and to suppress material 55 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 209. Upon information and belief, in 2011 and 2012, Zuckerberg held discussions with 2 Facebook executives Cox, Olivan, Lessin, Sheryl Sandberg, Andrew Bosworth and others in 3 which Zuckerberg made a decision to weaponize Facebook Platform using a policy called 4 "Reciprocity," which included Zuckerberg's decision to shut down public access to the Graph 5 API Data upon which 643's business depended. Upon information and belief, Zuckerberg's 6 motivations for his decision to create a Reciprocity Policy and shut down public access to Graph 7 API data were two-fold: (1) restrain competition in a wide range of software markets to make 8 room for new products from Facebook and its close partners; and (2) shut down all mechanisms 9 for apps to grow organically in order to force apps to prop up Facebook's new mobile advertising 10 business or else Facebook would shut them down. The first motivation helped ensure that no new 11 competitive threat could ever become as big as Facebook; the second motivation ensured that 12 Facebook could make the transition from desktop to mobile without experiencing a significant 13 drop in revenues in order to tum around the underperforming business. Upon information and 14 belief, the Reciprocity Policy required that a Developer provide to Facebook anything that 15 Facebook in its own discretion deemed valuable, including unrelated advertising purchases, 16 feeding data back to Facebook, ownership interests in the Developer's company, intellectual 17 property rights, or other valuable but unrelated consideration in order to continue to maintain 18 access to publicly available Graph API Data. Upon information and belief, if companies refused 19 to reciprocate, Facebook would shut off their access to data and/or build its own scraping tools to 20 pull data from the company's website or app directly. Upon information and belief, the practical 21 effect of the Reciprocity Policy for many companies was that they would be shut out ofFacebook 22 Platform, and this was Zuckerberg's intention in implementing the Reciprocity Policy. 23 210. Facebook published its Reciprocity Policy in 2012 or 2013 on its public website 24 but, upon information and belief, intentionally, maliciously, willfully and negligently opted not to 25 disclose that this policy entailed the privatization of Graph API Data that Facebook for years had 26 represented would be available publicly on equal and fair terms. Facebook further did not disclose 27 when publishing this policy that Facebook had already begun enforcing these anti-competitive 28 73 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 information that made it impossible for 643 and other Developers to understand the impact to 2 their applications based on Zuckerberg's convoluted and contradictory announcement on April 3 30, 2014. Upon information and belief, Sukhar, Vernal and others worked directly with 4 Zuckerberg to suppress this material information in the announcement and to disseminate this 5 fabricated narrative around user trust. 127. 6 Upon information and belief, Zuckerberg tasked Sukhar and Vernal, among others, 7 with propagating this fraudulent narrative internally to Facebook employees and externally to 8 Developers and the public. Upon information and belief, Sukhar, Vernal and the other Conspiring 9 Facebook Executives actively participated and conspired in the propagation of this fraudulent 10 narrative. 128. 11 Upon information and belief, issues like user trust, user control, privacy and the 12 rare use of certain Graph API data- all of which Zuckerberg and other Facebook employees 13 stated publicly as reasons for restricting data access and breaking tens of thousands of 14 applications - were not in fact the actual reasons for restricting data access at the time Zuckerberg 15 made and the Conspiring Facebook Executives participated in the decision. Upon information and 16 belief, removing potential competitive threats and leveraging Platform to build Facebook's 17 mobile advertising business were the primary or exclusive reasons for closing the Open Graph. 18 Further, upon information and belief, decisions were not made unilaterally but in combination and 19 concert with other large companies and exceptions were made for certain applications that are 20 more susceptible to violating user trust or where user trust is in fact more important than in 21 normal applications, such as applications that require payments. These exceptions demonstrate 22 that user trust could not have been the actual reason for Facebook's decision to restrict Graph API 23 data. 24 129. Upon information and belief, Zuckerberg and the Conspiring Facebook Executives 25 directed their public relations team to feed reporters false information and in certain cases drafted 26 reporters' stories themselves in order to disseminate this fabricated narrative among the public 27 and Developer community. 28 56 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 lifestyle apps, and health and fitness apps. Facebook at various times shut down data access to 2 apps in these categories and made partial disclosures that these apps were in violation of policies. 3 However, upon information and belief, many of these apps violated no published policy. Rather, 4 policy was used as a pretext for anti-competitive data restrictions. Had Facebook fully disclosed 5 its reasons for shutting down access to these apps in its public statements, 643 would not have 6 invested in or continued to invest in its business. Facebook's partial disclosures around its reasons 7 for shutting down data access to these app categories at various times from 2012 through 2015 8 greatly enriched Facebook by making room for its own products on mobile phones -as a result, 9 four ofthe five most popular apps worldwide across all major smartphone platforms are now 10 Facebook-owned apps (https ://thenextweb. com/apps/20 17/04/ 18/facebook-downloaded-app- 11 netflix/). 12 213. During this time Facebook maintained a public "size policy" whereby companies 13 that acquired large numbers of users could be potentially subject to rate limiting or data throttling 14 restrictions, which is standard in the industry. However, upon information and belief, the "size 15 policy" also included an informal but effective component whereby if a company became too 16 large and successful, it would go on Zuckerberg's blacklist and have their data access shut off. 17 Upon information and belief, the "size policy" published on the Facebook website would have 18 been materially qualified ifFacebook had fully disclosed its own internal definition of the "size 19 policy". Upon information and belief, Facebook employees would even encourage companies to 20 continue to rely on its data or avoid telling the company its data will be shut off in order to induce 21 the company to grow in reliance on Facebook with full knowledge that once the company 22 obtained a certain size, Facebook would shut it down. Facebook thus made a partial disclosure 23 that it was maintaining a fair and neutral platform but failed to qualify this disclosure with 24 material information that the size of a company would affect Facebook's position on whether to 25 remain fair and neutral. Had Facebook shared all material facts related to its size policy, 643 26 would never have invested or continued to invest in building its business. 27 28 75 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 214. Upon information and belief, starting in mid-to-late 2012 and continuing through 2 mid-2013, Zuckerberg communicated the decision he had already made to restrict Graph API data 3 in order to restrain competition for Facebook's new products and to prop up Facebook's new 4 mobile advertising business to senior executives on the Platform team, including Vernal (VP 5 Engineering for Platform), Sukhar (Head of Developer Products), Doug Purdy (Director of 6 Engineering for Platform), Eddie O'Neil (Product Manager for Platform), and other senior 7 members of the Platform and developer teams. Upon information and belief, starting in late 2012 8 and throughout 2013, at Zuckerberg's instruction, Vernal, Sukhar, Purdy, O'Neil and others 9 began implementing Zuckerberg's decision to restrict data access for anti-competitive reasons 10 under the Reciprocity Policy framework. Upon information and belief, the Platform team, 11 managed by Vernal, was working on a public announcement of these changes to be released 12 before the end of2012. However, the changes were not publicly disclosed. Had Facebook made 13 the planned public announcement in late 2012, 643 would never have invested in or continued to 14 invest in building its business. 15 215. After Zuckerberg's decision to restrict Graph API Data for anti-competitive 16 reasons, Facebook continued to represent publicly that Facebook Platform was a fair and neutral 17 competitive playing field and that access to this data would remain available without specifying 18 any term. By way of example, Cox's June 20, 2012 speech disclosed that Ticketmaster 19 dramatically increased revenues by incorporating friends data, disclosing that friends data was 20 valuable to businesses, and yet Cox made no mention that Facebook was removing the full 21 friends list and friends data would only apply to existing app users, making it impossible for new 22 companies to build applications that compete with incumbents. This partial representation 23 inducing developers to use friends data would have been materially qualified by the fact that, 24 upon information and belief, Cox already knew that friends data would be severely restricted. 25 216. By way of example, Zuckerberg's October 20, 2012 speech disclosed that 26 Facebook maintained the largest and highest quality photos database on the Internet, implying 27 that this data was extremely valuable to developers, and yet Zuckerberg withheld that he had 28 76 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Thi s is something we wanted internally as we build on this plat orm, so now everything is g01ma 2 be ver ioned so you get to decide which version of the API you get to build against." 3 133. Accordingly, Zuckerberg made at least four representations of fact: (1) Facebook 4 continued to provide a level playing field to Developers, including the ability to use the same 5 tools as Facebook employees to develop their applications; (2) Facebook continued to be 6 committed to providing developer access "that you can rely on for the long term"; (3) Facebook 7 promised that for all of its Core API endpoints it would guarantee their stability for at least two 8 years going forward; (4) Facebook promised that it would let Developers choose which version of 9 the API they would like to access as it introduces API versioning ("This is something we want to 10 make sure that all the apps we wrote two years ago keep working. This is something we wanted 11 internally as we build on this platform, so now everything is gonna be versioned so vou get to 12 decide which version of the API you get to build against."). 13 134. Because Zuckerberg suppressed material facts in his announcement, many 14 Developers initially applauded the 2-year stability guarantee and the ability to let Developers 15 choose which version of the API to build against. One blogger applauded Facebook's 16 commitment to Developers in noting: "Facebook co-founder and CEO Mark Zuckerberg 17 announced a two-year stability guarantee for all of the company's core APis and platforms. In 18 fact, every API launched by Facebook will now be versioned, and Developers will be able to 19 choose which version to build on." (See http:/lthenextweb.com/facebook/2014/04/30/facebook- 20 announces-two-year-stability-guarantee-core-apis-sla-fix-major-bugs-within-48-hours/#gref.) 21 TechCrunch and many other bloggers also reported on the API Guarantee, stating that Developers 22 "will be able to build with confidence knowing that a Core API will be available for at least two 23 years". (See http:/!techcrunch.com/2014/04/30/facebook-api-guarantee/.) 24 135. Upon information and belief, Zuckerberg's announcement contradicted active 25 plans Facebook had been implementing for almost two years at Zuckerberg's personal direction. 26 At no time in his announcement did Zuckerberg mention that all of the Graph API Data would be 27 removed, notwithstanding that he had made the decision to do so two years prior and had 28 58 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 materially qualified by the fact that, upon information and belief, Cross had already been 2 informed by his superiors that the data he was inducing these developers to build businesses 3 around was going to be severely restricted. Cross' false statements and partial disclosures were 4 made at the direction of the Conspiring Facebook Executives. 5 220. By way of example, Zuckerberg's September 18, 2013 speech in which he stated 6 that Facebook wants to "make it simple to build great apps that have identity, friends and all the 7 stuff that you want built in really easily" was a partial disclosure of the availability of friends data 8 and the other valuable Graph API data that clearly was intended to induce developers to spend 9 time and money building their products and businesses around Facebook's friends data and other 10 valuable Graph API data. This partial representation inducing developers to build these 11 businesses using this data would have been materially qualified by the fact that, upon information 12 and belief, Zuckerberg had decided more than a year prior to severely restrict the data he was 13 inducing developers to use to build their businesses. 14 221. Further, upon information and belief, at the F8 on April 30, 2014, Zuckerberg 15 made repeated partial disclosures on stage that would have been materially qualified by facts of 16 which Zuckerberg was already aware. Zuckerberg disclosed that developers would have two 17 years to build against Facebook's current Graph API, but failed to disclose the material fact that 18 this did not apply to the existing Graph API but only to future versions. Zuckerberg disclosed that 19 developers could choose to decide which version of the API to build against, but failed to disclose 20 the material fact that this choice would be time-constrained by Facebook with a time limit set in 21 Facebook's own discretion. Zuckerberg disclosed that certain valuable Graph API data would be 22 removed, but failed to disclose the material fact that this data was not in fact being removed 23 entirely but was simply being privatized for the benefit of companies who paid Facebook 24 substantial advertising fees. Zuckerberg disclosed that certain valuable Graph API data would be 25 removed, but, upon information and belief, failed to disclose the material fact that he had already 26 decided to remove other valuable Graph API data, most importantly the newsfeed APis. 27 28 78 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 222. These and numerous other partial disclosures that deliberately shared certain facts 2 but withheld other related material facts induced investment by developers, including 643, 3 notwithstanding Facebook's full knowledge that these investments would be irreparably 4 damaged. These partial disclosures were designed to unjustly enrich Facebook and the Conspiring 5 Facebook Executives and were made repeatedly by Facebook and certain of its executives on 6 many occasions from May 2007 until at least January 20, 2015, including on the dates and times 7 alleged herein, and in particular in speeches by Zuckerberg and official statements posted on 8 Facebook's website. 9 223. Facebook, Zuckerberg and the Conspiring Facebook Executives further engaged in 10 partial disclosures of fact related to the fraudulent narrative they fabricated to mask the anti- 11 competitive scheme. Upon information and belief, in early 2014, Zuckerberg directed Sukhar and 12 Vernal to develop a narrative that disclosed that the Graph API Data would be completely 13 removed from Facebook Platform. Upon information and belief, however, this partial disclosure 14 omitted the fact that, although the data was being removed from public view, it was not being 15 removed from Facebook Platform. Upon information and belief, instead ofbeing removed, the 16 data was being privatized. Upon information and belief, Zuckerberg deliberately concealed the 17 fact that the Graph API Data was being privatized in his April30, 2014 announcement and 18 instead made only a partial disclosure that the information was being removed. Upon information 19 and belief, Facebook had already for over a year or more engaged numerous companies to enter 20 into special whitelist agreements to maintain private access to the data after it was publicly 21 removed. Upon information and belief, the companies who were offered special, whitelist access 22 to the privatized Graph API Data were ones who either agreed to purchase hundreds of thousands 23 of dollars in unrelated mobile ads, were friends of Zuckerberg, Sandberg or other Facebook 24 executives, or provided other valuable consideration, such as intellectual property or data, to 25 Facebook. Had Facebook disclosed at any time in 2012, 2013, or 2014 that the Graph API Data 26 was being privatized in any of its numerous public disclosures regarding Graph API Data, of 27 28 79 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 which it sent dozens to 643, then 643 would have not invested in or continued to invest in 2 building its business. 3 224. Facebook and certain of its executives had a duty to speak truthfully and to 4 disclose material information concerning the closing of access to data arising from Facebook's 5 Agreement with 643 to be a Developer on Facebook Platform and 643's Agreement to abide by 6 Facebook's policies and procedures, as alleged above. Upon information and belief, Facebook's 7 public justification that it was implementing the anti-competitive Graph API Data restrictions in 8 order to protect user privacy and control only partially disclosed Facebook's justifications. Upon 9 information and belief, Facebook concealed the anti-competitive Graph API Data restrictions 10 behind a revamp of its Login product in order to cloak these changes under a narrative about user 11 control and privacy._The narrative that Facebook removed the Graph API Data to give users more 12 control is directly undermined by the fact that after the changes were implemented, Facebook 13 users could no longer control whether friends could access their information on third party apps. 14 The control users previously had to enable their friends to access data about them from apps other 15 than Facebook was transferred over to Facebook. This meant that only Facebook (and not 16 Facebook's users) could now decide what data a user's friends could see about them on other 17 apps. Had Facebook not concealed its anti-competitive Graph API Data restrictions behind the 18 Login product announcement, 643 would not have continued investing in its business and would 19 have substantially mitigated its damages. 20 225. Further, upon information and belief, Facebook provided full disclosure of these 21 changes to certain Developers throughout 2012, 2013 and 2014 but did not fully disclose the 22 nature of these changes to 643 until January 20, 2015. Had Facebook made full disclosure to 643 23 at the time it made full disclosure to certain other Developers, then 643 would not have invested 24 or continued to invest in building its business. 25 226. Further, Facebook's public disclosure that it made these changes out of respect for 26 user privacy is undermined by numerous Facebook projects that deliberately, willfully, 27 intentionally, recklessly and negligently violated privacy by only making partial disclosures to 28 80 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 Developers regarding how Facebook collected, stored and transmitted user data. Upon 2 information and belief, beginning at least by 2012, Olivan directed a range of projects under the 3 supervision and direction of Zuckerberg, Cox and Lessin that deliberately, intentionally, 4 maliciously, recklessly and negligently violated user privacy in order to effectuate Facebook's 5 anti-competitive scheme of baiting companies to rely on Facebook Platform only to shut them 6 down in order to restrain competition in a wide range of software markets. At all times, Olivan 7 was acting under the direction and approval of Zuckerberg, Cox and Lessin, who authorized 8 partial disclosures ofFacebook's conduct that would have been undermined had Facebook made 9 a full disclosure of material facts. 643 relied on Facebook's partial disclosures that it respected 10 user privacy, as this was a key consideration in whether it was safe to build a business on 11 Facebook's operating system. Had Facebook made full disclosures regarding any of its deceptive 12 projects violating user privacy, 643 would not have felt comfortable continuing to invest in 13 building its business as Facebook's privacy failures directly impact 643 in two key ways: (1) 14 Facebook's privacy failures make it extremely difficult for 643 to establish trust with its own 15 customers; (2) Facebook's unfair competitive advantage gained by information obtained in 16 violation of user privacy makes it extremely difficult for 643 to compete on a level playing field. 17 In short, Facebook deliberately and repeatedly undermining its public commitmentto user 18 privacy caused substantial harm to 643's customers and created a risk to 643's business. Had 643 19 been aware of the full scope of any of these projects, 643 could not have proceeded in good 20 conscience with building a business that relied on Facebook. 21 ~ 227. By way of example, upon information and belief, as disclosed in an August 2017 22 Wall Street Journal article (https://www.wsj.com/articles/facebooks-onavo-gives-social-media- 23 firm-inside-peek-at-rivals-users-1502622003), Facebook directed a project to collect certain data 24 from consumers who had downloaded the Onavo app, a virtual private network app downloaded 25 by approximately 30 million people, which Facebook purchased in October 2013. Upon 26 information and belief, before the WSJ article, Facebook failed to disclose that it used Onavo data 27 to measure what people do on their phones beyond Facebook's own suite of apps, including 28 81 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages detailed information on things such as which apps people generally are using, how frequently, for 2 how long, and whether more women than men use an app in a specific country. Upon 3 information and belief, Facebook failed to disclose that it used this data for competitive 4 intelligence of numerous apps. Further, upon information and belief, Facebook's decision to 5 purchase a large competitive application (WhatsApp) was heavily influenced by Facebook's 6 ability to obtain this non-public information from Onavo. Upon infonnation and belief, at all 7 times, the employees involved in this project were acting under the direction and approval of 8 Zuckerberg, Cox, Lessin and Olivan. Had Facebook fully disclosed this deceptive practice 9 publicly to users and Developers when it made public disclosures regarding its purchase of Onavo 10 and its update to Onavo's Terms of Service, then 643 would not have invested in or continued to 11 invest in building its business. 12 228. Upon information and belief, at least by 2012 or 2013, Facebook collected various 13 content and metadata regarding communications on Android phones without fully disclosing this 14 to Facebook's users. Upon information and belief, Facebook used this data to give certain 15 Facebook products and features an unfair competitive advantage over other social applications on 16 Facebook Platform. Facebook disclosed publicly that it was reading text messages in order to 17 authenticate users more easily (see, e.g., https://www.facebook.com/help/210676372433246). 18 Upon information and belief, this partial disclosure failed to state accurately the type of data 19 Facebook was accessing, the timeframe over which it had accessed it, and the reasons for 20 accessing the data of these Android users. Upon information and belief, Facebook also actively 21 collected information it did not fully disclose from non-Facebook and non-Android users who 22 communicated with Facebook users who owned Android phones. These consumers never 23 consented to have Facebook collect this information. Upon information and belief, at all times, 24 the employees involved in this project were acting under the direction and approval of 25 Zuckerberg, Cox, Lessin and Olivan. Had Facebook fully disclosed its practices regarding 26 collection and use of metadata and content of communications on Android phones, 643 would not 27 have invested in or continued to invest in building its business. 28 82 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 229. Further, upon information and belief, Facebook deliberately ignored the privacy 2 settings of a Facebook user's friend list in order to improve a certain prominent feature in the 3 Facebook app and website. Upon information and belief, Facebook made partial public 4 disclosures of this practice while withholding material facts that, if disclosed, would have 5 materially qualified Facebook's public statement (see, e.g., https://gizmodo.com/facebook- 6 figured-out-my-family-secrets-and-it-wont-tel-1797696163). Upon information and belief, at all 7 times, the employees involved in this project were acting under the direction and approval of 8 Zuckerberg, Cox, Lessin and Olivan. Had Facebook made a full public disclosure regarding 9 whether it respected user privacy settings for all Facebook features, then 643 would not have 10 11 invested in or continued to invest in building its business. 230. Further, upon information and belief, Facebook implemented a project to tum on 12 the Bluetooth setting in the background in order to locate users. Upon information and belief, 13 Facebook made partial disclosures regarding how and when it would tum on the Bluetooth 14 feature and collect and store this data. Upon information and belief, Facebook did not fully 15 disclose how this information would be used by Facebook. Upon information and belief, at all 16 times, the employees involved in this project were acting under the direction and approval of 17 Zuckerberg, Cox, Lessin and Olivan. 18 231. Further, upon information and belief, in 2013 and 2014 Facebook deliberately 19 implemented code to have a user's privacy setting lapse after a period of time, requiring the user 20 to go through additional effort in order to have the user's privacy settings respected. Facebook 21 made partial disclosures around this time regarding privacy settings, but did not fully disclose that 22 it had caused certain settings to lapse after a period of time. Upon information and belief, at all 23 times, the employees involved in this project were acting under the direction and approval of 24 Zuckerberg, Cox, Lessin and Olivan. Had Facebook fully disclosed its handling of this and 25 related privacy issues, 643 would not have invested in or continued to invest in building its 26 business. 27 28 83 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 232. Upon information and belief, from 2007 through at least 2015, Facebook willfully, 2 intentionally, recklessly, maliciously and negligently failed to pass privacy or age information 3 when sending Developers Graph API Data. This required Developers, including 643, to incur 4 enormous costs in order to comply with user privacy settings and age restrictions. Facebook made 5 repeated public disclosures that withheld this fact. Upon information and belief, at all times, the 6 employees involved in this project were acting under the direction and approval of Zuckerberg 7 and Vernal. Had Facebook fully disclosed that it did not respect user privacy settings or age 8 requirements when accessing information through third party apps, 643 would not have invested 9 in or continued to invest in its business. 10 233. Upon information and belief, at least by 2013 and continuing at least through 11 2015, Facebook continued to explore and implement ways to track users' location, to track and 12 read their texts, to access and record their microphones on their phones, to track and monitor their 13 usage of competitive apps on their phones, and to track and monitor their calls. For example, 14 upon information and belief, Facebook expanded its program to access and monitor the 15 microphone on Android phones in 2015 without securing the explicit consent of all users and 16 while only providing partial disclosures as to what information was being obtained and for what 17 purposes it was being used (see, e.g., 18 https://www.facebook.com/help/community/question/?id=974781930088 and 19 https ://www. cnbc. com/20 17I 10/3 0/facebook-denies-listening-to-user-conversations-via- 20 microphones.html). As another example, upon information and belief, Facebook has not fully 21 disclosed the manner in which it preprocesses photos on the iOS camera roll, meaning if a user 22 has any Facebook app installed on their iPhone, then Facebook accesses and analyzes (using 23 facial and other image recognition) the photos the user takes and/or stores on the iPhone (see, 24 e.g., https://www .facebook.com/help/community/question/?id= 10209909027988265). Facebook's 25 partial disclosures regarding iPhone photo access and what information it gleans from the photos 26 have been woefully deficient. Upon information and belief, at all times, the employees involved 27 28 84 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 in this project were acting under the direction and approval of Zuckerberg, Cox, Lessin and 2 Olivan. 3 234. Upon information and belief, Facebook engaged in these deceptive projects in 4 order to obtain information that enabled Facebook to identify and restrict data access to apps on 5 Platform that posed a competitive threat and/or to give its own features an unfair competitive 6 advantage relative to comparable features of other social applications on Platform. Facebook 7 made various partial disclosures of these projects since 2013 but in almost all cases failed to fully 8 disclose material information necessary for Developers and users to evaluate their continued use 9 ofFacebook and its Platform. At all times, these projects were undertaken with the direction and 10 approval ofZuckerberg, Cox, Lessin and Olivan. Had Facebook fully disclosed any ofthese 11 practices, these full disclosures would have been important information to 643 that would have 12 caused it to terminate its relationship with Facebook as building a business on top of a ticking 13 time bomb of privacy violations would not have been reasonable. 14 235. Facebook's duty to speak truthfully and to disclose material information 15 concerning its handling of user data in these various projects, its 2011 or 2012 decision regarding 16 the anti-competitive Graph API Data restrictions also arose from partial disclosures of fact and 17 misinformation made to 643 and other Developers concerning the manner in which Facebook 18 collects, stores and transmits data, including that Facebook maintained the data with respect for 19 user privacy and transmitted it to developers on fair, equal and neutral terms. Facebook's duty to 20 speak truthfully and to disclose material information concerning its handling of user data and its 21 decision to close access to the Graph API Data also arose from the fact that 643 and Facebook 22 had shared confidential and highly sensitive information containing consumers' private 23 information. 24 236. Facebook's duty to speak truthfully and to disclose material information 25 concerning its handling of user data and its decision to close access to the Graph API Data also 26 arose from the fact that 643 and Facebook had entered into a commercial agreement in which 643 27 expended over $200,000 in order to build a business using data Facebook sent to 643 and gave 28 85 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 643 all rights to use under the Agreement. This Agreement further required that 643 permit 2 Facebook to audit its highly confidential source code and intellectual property. 3 237. Facebook's duty to speak truthfully and to disclose material information 4 concerning its handling of user data and its decision to close access to the Graph API Data also 5 arose from the fact that Facebook made public representations around its management of user 6 data that enticed tens ofthousands of companies to build businesses on Facebook Platform for 7 many years, greatly enriching Facebook and the Conspiring Facebook Executives all while 8 Facebook was actively implementing plans to irreparably damage these companies' investments. 9 238. The concealment of material facts by Facebook, Zuckerberg and the Conspiring 10 Facebook Executives fraudulently induced 643 to enter into its Agreement with Facebook, as 643 11 would not have entered into the Agreement if Facebook had disclosed the material facts, most 12 important among them that Zuckerberg already decided to shut down access to the data 643's 13 business relied upon before 643 was even incorporated or raised seed capital. At no time did 643 14 rescind its Agreement with Facebook. Facebook, Zuckerberg and the Conspiring Facebook 15 Executives benefited materially from their fraudulent, malicious and oppressive conduct, 16 including but not limited to financial benefits tied to the growth ofFacebook and the dramatic 17 reversal of its stock price as a result of restraining competition in a wide range of software 18 markets and weaponizing Facebook Platform to force companies to build Facebook's new mobile 19 advertising business or risk being shut down. 20 21 22 239. 643 invested considerable capital, labor, time, and effort into developing its technology in reliance on Facebook's representations and partial disclosures. 240. 643 's reliance was reasonable because Facebook had consistently made these 23 representations and partial disclosures for seven years and tens of thousands of other Developers 24 also relied on these representations and partial disclosures that Facebook was a responsible 25 steward of privacy and a responsible and fair referee ofFacebook Platform, one of the largest 26 software economies globally. 27 28 86 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 241. 643 's reliance was foreseeable by Facebook as Zuckerberg has publicly stated 2 Facebook's intent was to entice Developers to help generate revenues for Facebook, and 3 Facebook's conduct for seven years was designed to induce such reliance. 4 242. 643 was injured as a result of its reliance on Facebook's representations and 5 material omissions, which Facebook knew to be false or acted recklessly in representing as true, 6 in an unascertained amount in excess of $25,000.00, to be established according to proof at trial. 7 In taking the actions alleged herein, Facebook, Zuckerberg and the Conspiring Facebook 8 Executives acted with fraud, malice and oppression, and in reckless disregard ofthe rights of643. 9 243. Accordingly, Defendants are liable to 643 for damages. COUNT IV: INTENTIONAL MISREPRESENTATION [Against all Defendants] 10 11 244. 643 re-alleges and repleads paragraphs 1 through 243 as though set forth fully 245. Facebook, Zuckerberg and at various times the Conspiring Facebook Executives 12 herein. 13 14 clearly and unambiguously represented to 643 from May 2007 until January 20, 2015 that they 15 were maintaining a fair and neutral operating system for 643 to build software applications, 16 including, but not limited to, the following specific representations in official statements, 17 announcements, documents and meetings: 18 19 20 21 22 23 24 25 a. 643 would be able to integrate its applications into Facebook's social graph; b. 643 would have equal access to data relative to other Developers and to Facebook; c. 643 would have all rights necessary to access the data, tools and APis Facebook made available; d. 643 could easily access Graph API objects, including objects related to friend data, photo data, and other data uploaded by Facebook users; e. Facebook would support 643 in achieving mass distribution of its applications; 26 f. 27 g. 643 would have a fair chance to build a business on Facebook Platform; 28 Facebook would provide adequate tools for 643 to build its applications; 87 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages h. 643 would be able to monetize its applications on Facebook; 1 2 3 1. 643 would be able to build applications on a fair, level playing field relative to Facebook and other Developers; J. Developer applications would not be "second class citizens" compared to Facebook's own applications; 4 5 k. Developer applications that compete with Facebook applications would be welcome; and 6 1. 7 8 9 246. As long as 643 abided by its agreement with Facebook, including all privacy requirements, Facebook would be neutral as to 643 's applications and provide 643 with access on equal terms relative to all other Developers. These representations were made repeatedly by Facebook on many occasions from 10 May 2007 until at least January 20, 2015, including on the dates and times alleged herein, and in 11 particular in speeches by Zuckerberg and other Facebook employees at the direction of 12 Zuckerberg or one of the Conspiring Facebook Executives and in official statements posted on 13 Facebook's website. These representations were false. Facebook, Zuckerberg and the Conspiring 14 Facebook Executives knew such representations to be false or made such representations 15 recklessly and without regard for their truth when they made them or directed other Facebook 16 employees to make them. 17 247. Upon information and belief, beginning in 2012, Facebook, Zuckerberg and the 18 Conspiring Facebook Executives engaged in conduct and decisions that directly contradicted 19 these representations. Nonetheless, Facebook, Zuckerberg and the Conspiring Facebook 20 Executives continued for over two years to make representations they knew to be false or made 21 such representations recklessly and without regard for their truth. Facebook, Zuckerberg and the 22 Conspiring Facebook Executives intended for 643 and other Developers to rely on such 23 representations and made such representations either directly to 643 or in public fora with 24 reasonable likelihood that such representations would be obtained by 643. 25 248. Facebook, Zuckerberg and the Conspiring Facebook Executives had a duty to 26 speak truthfully and to disclose material information regarding their decision to restrict access to 27 data in Facebook Platform arising from Facebook's Agreement with 643 to be a Developer on 28 88 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Facebook Platform and 643's Agreement to abide by Facebook's policies and procedures, as 2 alleged above. 3 249. Upon information and belief, Zuckerberg repeatedly made statements from 2012 4 on that he knew to be false at the time he made them. Upon information and belief, Zuckerberg 5 intended for Developers like 643 to rely on such statements in order to induce them to generate 6 revenues for Facebook and to avoid public relations and or legal ramifications for Zuckerberg's 7 malicious, oppressive, fraudulent, reckless, negligent and/or anti-competitive conduct. 8 9 250. Upon information and belief, Cox repeatedly made statements from 2012 on that he knew to be false at the time he made them. Upon information and belief, Cox intended for 10 Developers like 643 to rely on such statements in order to induce them to generate revenues for 11 Facebook and to avoid public relations and or legal ramifications for Cox's malicious, oppressive, 12 fraudulent, reckless, negligent and/or anti-competitive conduct. 13 251. Upon information and belief, Olivan repeatedly made statements from 2012 on 14 that he knew to be false at the time he made them. Upon information and belief, Olivan intended 15 for Developers like 643 to rely on such statements in order to induce them to generate revenues 16 for Facebook and to avoid public relations and or legal ramifications for Olivan's malicious, 17 oppressive, fraudulent, reckless, negligent and/or anti-competitive conduct. 18 252. Upon information and belief, Lessin repeatedly made statements from 2012 on that 19 he knew to be false at the time he made them. Upon information and belief, Lessin intended for 20 Developers like 643 to rely on such statements in order to induce them to generate revenues for 21 Facebook and to avoid public relations and or legal ramifications for Lessin's malicious, 22 oppressive, fraudulent, reckless, negligent and/or anti-competitive conduct. 23 253. Upon information and belief, Vernal repeatedly made statements from 2012 on 24 that he knew to be false at the time he made them. Upon information and belief, Vernal intended 25 for Developers like 643 to rely on such statements in order to induce them to generate revenues 26 for Facebook and to avoid public relations and or legal ramifications for Vernal's malicious, 27 oppressive, fraudulent, reckless, negligent and/or anti-competitive conduct. 28 89 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 254. 1 Upon information and belief, Sukhar repeatedly made statements from 2012 on 2 that he knew to be false at the time he made them. Upon information and belief, Sukhar intended 3 for Developers like 643 to rely on such statements in order to induce them to generate revenues 4 for Facebook and to avoid public relations and or legal ramifications for Sukhar's malicious, 5 oppressive, fraudulent, reckless, negligent and/or anti-competitive conduct. 255. 6 Facebook's duty to speak truthfully and to disclose material information 7 concerning the closing of access to data also arose from partial disclosures of fact and 8 misinformation made to 643 and other Developers concerning the allegedly fair and equal access 9 to data. 10 256. Zuckerberg's decision to close 643's access to APis in 2012 was material 11 information that was not disclosed to 643. Had Facebook disclosed this material information to 12 643, 643 would never had made an investment in the App, and would not have continued to 13 invest in the App. Had Zuckerberg not intentionally misrepresented a host of material facts 14 related to Facebook Platform and related to Zuckerberg's decision to restrict access to the most 15 valuable information in Facebook Platform, 643 would never have made an investment in the 16 App, and would not have continued to invest in the App. 17 257. Further, upon information and belief, the Conspiring Facebook Executives, upon 18 Zuckerberg's personal instruction, engaged in a scheme from 2012 until2015 to intentionally 19 misrepresent critical facts about Facebook Platform and about Zuckerberg' s decision to restrict 20 data access on Facebook Platform. IfFacebook, Zuckerberg and the Conspiring Facebook 21 Executives had not engaged in this scheme to require dozens of employees to intentionally 22 misrepresent material facts, 643 would never have made an investment in the App, and would not 23 have continued to invest in the App. 24 258. Even when Zuckerberg announced the purported closing of the data on April30, 25 2014, an event 643 did not attend, Zuckerberg still intentionally misrepresented his decision to 26 restrict data access for widely used data in Graph API and only partially revealed material facts 27 while suppressing others, resulting in further investment from 643 and many other companies. 28 90 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 Upon information and belief, the Conspiring Facebook Executives actively participated, ratified, 2 served as agents and communicated key components of this intentional misrepresentation in 3 Zuckerberg' s announcement. 4 259. Facebook, Zuckerberg and the Conspiring Facebook Executives made these 5 representations in order to induce Developers to build applications that generate revenue for 6 Facebook and to avoid public relations and legal ramifications for their fraudulent, malicious, 7 oppressive and anti-competitive conduct. The Conspiring Facebook Executives participated, 8 ratified and/or served as agents ofFacebook in connection with their material omissions and their 9 actions to conceal material facts from Plaintiff and tens of thousands of other Developers. 10 260. Facebook, Zuckerberg and the Conspiring Facebook Executives benefited 11 materially from their fraudulent, malicious and oppressive conduct, including but not limited to 12 financial benefits tied to the growth ofFacebook and the dramatic reversal of its stock price as a 13 result of oligopolizing for Facebook and its close partners the various markets associated with 14 Facebook Platform. 15 261. 16 17 643 invested considerable capital, labor, time and effort into developing its technology in reliance on Facebook's representations. 262. 643 's reliance was reasonable because Facebook had consistently made public 18 representations as to equal access and a fair playing field in Facebook Platform for seven years 19 and tens of thousands of other Developers also relied on these representations. 20 263. 643's reliance was foreseeable by Facebook, Zuckerberg and the Conspiring 21 Facebook Executives as Zuckerberg has publicly stated his intent in making such statements was 22 to entice Developers to help generate revenues for Facebook. Further, Facebook's conduct for 23 seven years was designed to induce and reinforce such reliance. 24 264. 643 was injured as a result of its reliance on Facebook's representations and 25 material omissions, which Facebook knew to be false or acted recklessly in representing as true, 26 in an unascertained amount in excess of $25,000.00, to be established according to proof at trial. 27 28 91 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 190. Facebook' s decision to induce 643 to invest in building the App on top of Graph 1 2 API when Facebook already knew that it would be restricting access to Graph API was also 3 unlawful. 191. In taking the actions alleged herein, Facebook acted with fraud, malice and 4 5 oppression, and in reckless disregard of the rights of 643. 192. 643 suffered substantial injury as a result ofFacebook's actions, including the loss 6 7 of its investment in developing the App, the loss of its enterprise value and the loss of future 8 profits. 193. Accordingly, Facebook is liable to 643 for violation of California's Unfair 9 10 Business Practices Act. 194. As a proximate result of the acts and conduct ofFacebook herein alleged, 643 has 11 12 found it necessary to engage attorneys, and incur attorney's fees, and will continue to incur 13 attorney's fees, in an unascertained amount to be established according to proof following the 14 conclusion of trial. COUNT II: BREACH OF CONTRACT [Against Facebook] 15 16 195. 643 re-alleges and repleads paragraphs 1 through 194 as though set forth fully 17 herein. 18 19 20 21 22 23 24 25 26 27 28 196. 643 and Facebook entered into an agreement on December 11,2012 in which Facebook offered 643 "all rights necessary to use the code, APis, data, and tools you receive from us." (FB_0000021, Section 9.8). Facebook defined "Platform" as "a set of APis and services (such as content) that enable (643] to retrieve data from Facebook or provide data to [Facebook]. .. . By 'content' we mean anything ... users post on Facebook .... By 'data' or 'user data' ... we mean any data, including a user's content or infonnation that you or third parties can retrieve from Facebook or provide to Facebook through Platform .... By 'application' we mean any application or website that uses or accesses Platform." (FB _ 0000025). In exchange, 643 provided a host of rights to Facebook, including but not limited to a right to analyze and generate advertising revenues from 643 's application (Section 9.17), place content around 643 's 70 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 269. Regardless of its actual belief, Facebook, Zuckerberg and the Conspiring 2 Facebook Executives must have made those representations without any reasonable ground for 3 believing the representations to be true. 4 270. Facebook, Zuckerberg and the Conspiring Facebook Executives conveyed the 5 representations in a commercial setting for a business purpose, namely inducing Developers to 6 develop applications for Facebook. 7 271. Facebook, Zuckerberg and the Conspiring Facebook Executives made those 8 representations with the intent to induce Developers, including 643, to develop applications, 9 including the App, that used Graph API data, thereby adding features to Facebook, enhancing 10 11 Facebook's functionality and user experience, and generating more revenue for Facebook. 272. Upon information and belief, Cox repeatedly made statements from 2012 on 12 without any reasonable grounds for believing the representations to be true. Upon information 13 and belief, Cox intended for Developers like 643 to rely on such statements in order to induce 14 them to generate revenues for Facebook and to avoid public relations and or legal ramifications 15 for Cox's malicious, oppressive, fraudulent, reckless, negligent and/or anti-competitive conduct. 16 273. Upon information and belief, Olivan repeatedly made statements from 2012 on 17 without any reasonable grounds for believing the representations to be true. Upon information 18 and belief, Olivan intended for Developers like 643 to rely on such statements in order to induce 19 them to generate revenues for Facebook and to avoid public relations and or legal ramifications 20 for Olivan's malicious, oppressive, fraudulent, reckless, negligent and/or anti-competitive 21 conduct. 22 274. Upon information and belief, Lessin repeatedly made statements from 2012 on 23 without any reasonable grounds for believing the representations to be true. Upon information 24 and belief, Lessin intended for Developers like 643 to rely on such statements in order to induce 25 them to generate revenues for Facebook and to avoid public relations and or legal ramifications 26 for Lessin's malicious, oppressive, fraudulent, reckless, negligent and/or anti-competitive 27 conduct. 28 93 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 275. Upon information and belief, Vernal repeatedly made statements from 2012 on 2 without any reasonable grounds for believing the representations to be true. Upon information 3 and belief, Vernal intended for Developers like 643 to rely on such statements in order to induce 4 them to generate revenues for Facebook and to avoid public relations and or legal ramifications 5 for Vernal's malicious, oppressive, fraudulent, reckless, negligent and/or anti-competitive 6 conduct. 7 276. Upon information and belief, Sukhar repeatedly made statements from 2012 on 8 without any reasonable grounds for believing the representations to be true. Upon information 9 and belief, Sukhar intended for Developers like 643 to rely on such statements in order to induce 10 them to generate revenues for Facebook and to avoid public relations and or legal ramifications 11 for Sukhar's malicious, oppressive, fraudulent, reckless, negligent and/or anti-competitive 12 conduct. 13 277. 643 was not aware that Facebook and the Conspiring Facebook Executives' 14 representations were false, and 643 developed its technology in reliance on the truth of 15 Facebook's representations. 16 278. 643 's reliance on the truth ofFacebook's representations was justified because 17 Facebook had consistently made these representations for seven years without ever stating that it 18 could prevent Developers from building the specific kinds of applications Facebook was enticing 19 them to build all along. 20 21 22 279. 643 was injured as a result of its reliance on Facebook's representations, in an unascertained amount in excess of $25,000.00, to be established according to proof at trial. 280. In taking the actions alleged herein, Facebook, Zuckerberg and the Conspiring 23 Facebook Executives acted with fraud, malice and oppression, and in reckless disregard of the 24 rights of 643. 25 281. Accordingly, Defendants are liable to 643 for damages. 26 27 28 94 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages COUNT VI: INTENTIONAL INTERFERENCE WITH CONTRACT [Against all Defendants] 1 2 282. 643 re-alleges and repleads paragraphs 1 through 282 as though set forth fully 283. 643 had entered into license agreements and subscriptions for premium access 3 herein. 4 5 with its users. 6 284. Facebook, Zuckerberg and the Conspiring Facebook Executives knew of these 7 license agreements and subscriptions. 8 285. Facebook, Zuckerberg and the Conspiring Facebook Executives intentionally 9 interfered with and disrupted these contracts when it notified 643 on January 20, 2015 that it 10 would end 643's access to Graph API data on April30, 2015, despite knowing that interference 11 with these contracts would be certain or substantially certain to occur as a result ofFacebook's 12 act in ending 643 's access. 13 286. Facebook, Zuckerberg and the Conspiring Facebook Executives further 14 intentionally interfered with and disrupted 643's contracts with its users when it did terminate 15 643's access to Graph API data on April30, 2015, despite knowing that interference with these 16 contracts would be certain or substantially certain to occur as a result ofFacebook's act in ending 17 643 's access. 18 287. 643's contract with its users was thereby disrupted by Facebook, Zuckerberg and 19 the Conspiring Facebook Executives. 20 288. As a result, 643 has suffered and will suffer damage in an unascertained amount in 21 excess of$25,000.00 to be established according to proof at trial. 22 289. In taking the actions alleged herein, Facebook, Zuckerberg and the Conspiring 23 Facebook Executives acted with fraud, malice and oppression, and in reckless disregard of the 24 rights of 643. 25 290. Accordingly, Defendants are liable to 643 for damages. 26 27 28 95 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages COUNT VII: INTENTIONAL INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS [Against Defendants Zuckerberg, Cox, Olivan, Lessin, Vernal and Sukhar] 1 2 3 4 5 291. 643 re-alleges and repleads paragraphs 1 through 290 as though set forth fully 292. 643 had an expectation of economic benefit from its 4,481 users who downloaded herein. 6 the App and entered into 643 's license agreements. 643 had an existing relationship with these 7 users and at any time these users could open the App on their phones and tap a button to subscribe 8 to additional features that would result in additional monthly payments to 643. The potential for 9 these additional monthly payments went above and beyond the terms of the basic license to which 10 643 and the user had agreed, and therefore constitute prospective economic relations. The 11 existence of the license agreement between 643 and these 4,481 users demonstrates that they had 12 an existing relationship, and the opportunity for these users to opt-in to pay additional monies to 13 643 demonstrates that 643 had a reasonable and objective expectation of prospective economic 14 relations with these users with whom it had an existing relationship. 643 's contract structure was 15 tiered, so that consumers who entered into a basic contract with 643 at any time could upgrade 16 their contract to obtain additional features and pay 643 additional monies. Therefore, 643 had an 17 expectation of economic relations with its existing user base above and beyond the terms of their 18 existing contract. 643 had an expectation of economic benefit from the approximately 6,000 19 qualified prospective customers who opted in to the App's website by proactively going to the 20 website and inserting their email address in order to be notified of the public launch of the App. 21 643 had an existing relationship with these qualified prospective users since they signed up and 22 joined the App's website and became subject to the App's website's terms and conditions. 643 23 did not have a contract with many ofthese users who never downloaded the App. 643 had plans 24 to send additional emails to these 6,000 users to convert them into license agreements with 643 25 that would have resulted in monthly payments from these users to 643. The decision of these 26 qualified prospective customers to join the App's website and become subject to its terms and 27 conditions demonstrates 643 had an existing relationship with these consumers and a reasonable 28 96 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 and objective expectation of prospective economic relations since these qualified prospective 2 customers explicitly took action to indicate they would enter into contract with 643 when 643 3 notified them of the opportunity to do so. 643 did not have the opportunity to convert all of these 4 qualified prospective customers as a direct result ofFacebook's conduct. 5 293. Based upon research 643 conducted regarding user personas likely to download its 6 App, 643 hired at significant expense over 20 contractors to identify consumers likely to enter 7 into license agreements with 643. These consumers converted into qualified prospective 8 customers at a statistically significant and repeatable average rate of 6%, well above industry 9 norms. Approximately 13,000 of these consumers had not yet been contacted by 643. Given the 10 expense 643 undertook to identify and target prospective customers, and the high and repeatable 11 rate of conversion, 643 had an objective and reasonable expectation of prospective economic 12 relations with these prospective customers. 13 294. 643 purchased advertising campaigns on Facebook using Facebook's mobile App 14 Install Ad product. These advertisements purchased by 643 potentially reached hundreds of 15 thousands ofFacebook users, a portion of which entered into license agreements with 643. 643 16 had an objective and reasonable expectation of prospective economic relations from prospective 17 customers to whom it targeted in these advertising campaigns and in future advertising campaigns 18 643 planned to administer. 19 295. Upon information and belief, around the time Zuckerberg made the decision to 20 implement Facebook's anti-competitive scheme in 2012, Facebook was experiencing substantial 21 difficulty transitioning its service from desktop computers to mobile devices. The executive team 22 was extremely concerned around the impact this transition would have on Facebook's revenues, 23 particularly in light of the fact that Facebook was planning an initial public offering (IPO) of its 24 shares around this time. In discussions in 2011 and 2012, Zuckerberg and other members of 25 Facebook's management team, including Lessin, Olivan, Cox, Sandberg, and Bosworth, decided 26 to remove any APis in Facebook Platform that permitted mobile apps to obtain organic growth, 27 including the Graph API Data. Organic growth enabled an app to acquire new users without 28 97 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 having to purchase advertising. Facebook built features like the newsfeed APis and full friends 2 list in order to drive organic growth for Developers and represented for many years that organic 3 growth was a key reason a developer should build its business on Facebook Platform. Organic 4 growth was primarily achieved through the newsfeed APis and full friends list, because these 5 APis let potential new users of an app learn about and download the app from existing users 6 without the app needing to purchase advertisements to reach that new user. Upon information and 7 belief, Zuckerberg decided to implement the anti-competitive scheme in 2012 not only to restrain 8 competition to make way for new Facebook products but also to hold hostage the tens of 9 thousands of companies that relied on Facebook Platform for organic growth. By eliminating the 10 full friend list, friend permissions and news feed APis, Zuckerberg placed tens of thousands of 11 companies in an impossible position: either spend hundreds of thousands of dollars each year 12 buying ads with Facebook's new mobile advertising product or shut down the product or 13 business. For companies who could afford it, the choice was clear: give in to Zuckerberg's 14 demands, pony up the cash, and stay in business. Based in significant part upon the 15 representations Facebook made from 2007 until2014 that Facebook Platform was the most 16 effective organic growth and distribution channel for applications, 643 decided to build its 17 business on Facebook Platform because Facebook represented that any friends of 643 's users 18 were qualified prospective customers who could enter into license agreements with 643 with a 19 single click or tap on a notification from a friend or a post in their newsfeed. There were 20 approximately 100,000 Facebook users who were friends ofthe 4,481 customers of643, any of 21 whom Facebook represented repeatedly for 7 years could enter into license agreements with 643 22 seamlessly and easily with a single click or tap. In a survey of test users of the App, 75% ofusers 23 said they were likely to recommend the App to a friend, with 40% saying they already had 24 recommended the App to a friend. All of these friends who had received recommendations from 25 existing users to download the App were prospective customers with whom 643 could now 26 classify as qualified leads. Therefore, 643 had an objective and reasonable expectation of 27 prospective economic relations with these prospective customers and Zuckerberg interfered with 28 98 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 643 's prospective economic advantage with these customers when he decided to shut down all 2 organic growth and distribution channels in 2012, before 643 was formed as a Delaware limited 3 liability company. 4 296. 643 thus had relationships with the following categories of consumers: its test 5 users (4,481 consumers), qualified prospective customers (6,000 consumers), prospective 6 customers (13,000 consumers), Facebook friends of customers (100,000 consumers), and 7 Facebook users who received 643 's test advertisements (tens of thousands of consumers). In the 8 absence ofFacebook's bait-and-switch scheme, 643 would have obtained future economic benefit 9 above and beyond its current contracts in all of these categories of consumers. 10 297. The conduct ofZuckerberg and the Conspiring Facebook Executives was wrongful 11 on a number of independent grounds, including violation of California's Unfair Competition law 12 (including violation of the FTC Order), and the common law causes of action for intentional 13 misrepresentation, negligent misrepresentation, and concealment. 14 298. Zuckerberg and the Conspiring Facebook Executives knew of643's relationship 15 with the users or prospective users of the App, and knew or should have known of 643 's 16 marketing and advertising tests of the App and its plans to grow the App both organically and 17 through participating in Facebook's mobile advertising product. 18 299. Zuckerberg and the Conspiring Facebook Executives intentionally disrupted these 19 relationships when they decided in 2012 to privatize Graph API Data. From that moment on, 20 643 's business was operating on borrowed time with no possibility of obtaining economic 21 advantage with prospective customers and yet 643 had no way of knowing this was the case. 22 300. Zuckerberg and the Conspiring Facebook Executives intentionally disrupted these 23 relationships when they decided throughout 2012 and 2013 to fail to provide proper privacy 24 controls for information Facebook sent to 643, requiring 643 to build its own controls at 25 significant cost notwithstanding that Facebook made partial disclosures implying that it handled 26 this user data properly. 27 28 99 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 301. Zuckerberg and the Conspiring Facebook Executives intentionally disrupted 643 's 2 relationships with users and prospective users when they emailed 643 on January 20, 2015 that 3 Facebook would end 643's access to Graph API Data, despite knowing that interference with 4 these relationships would be certain or substantially certain to occur as a result ofFacebook's act 5 in ending 643 's access. 6 302. Zuckerberg and the Conspiring Facebook Executives further intentionally 7 interfered with and disrupted 643's relationships with its users and prospective users when it did 8 terminate 643's access on April30, 2015, despite knowing that interference with these 9 relationships would be certain or substantially certain to occur as a result ofFacebook's conduct 10 11 12 13 14 15 16 17 18 19 20 21 22 23 in ending 643's access. 303. 643 's relationship with its users and prospective users was thereby disrupted, and will be further disrupted. 304. As a result, 643 suffered damage in an unascertained amount in excess of $25,000.00 to be established according to proof at trial. 305. In taking the actions alleged herein, Zuckerberg and the Conspiring Facebook Executives acted with fraud, malice and oppression, and in reckless disregard ofthe rights of643. 306. Accordingly, Defendants Zuckerberg, Cox, Olivan, Lessin, Vernal and Sukhar are liable to 643 for damages. COUNT VIII: NEGLIGENT INTERFERENCE WITH PROSPECTIVE ECONOMIC RELATIONS [Against Defendants Zuckerberg, Cox, Olivan, Lessin, Vernal and Sukhar] 307. 643 re-alleges and repleads paragraphs 1 through 298 and 303 through 306 as though set forth fully herein. 308. 643 had an expectation of economic benefit from its 4,481 users who downloaded 24 the App and entered into 643 's license agreements. 643 had an existing relationship with these 25 users and at any time these users could open the App on their phones and tap a button to subscribe 26 to additional features that would result in additional monthly payments to 643. The potential for 27 these additional monthly payments went above and beyond the terms of the basic license to which 28 100 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 643 and the user had agreed, and therefore constitute prospective economic relations. The 2 existence of the license agreement between 643 and these 4,481 users demonstrates that they had 3 an existing relationship, and the opportunity for these users to opt-in to pay additional monies to 4 643 demonstrates that 643 had a reasonable and objective expectation of prospective economic 5 relations with these users with whom it had an existing relationship. 643's contract structure was 6 tiered, so that consumers who entered into a basic contract with 643 at any time could upgrade 7 their contract to obtain additional features and pay 643 additional monies. Therefore, 643 had an 8 expectation of economic relations with its existing user base above and beyond the terms of their 9 existing contract. 643 had an expectation of economic benefit from the approximately 6,000 10 qualified prospective customers who opted in to the App's website by proactively going to the 11 website and inserting their email address in order to be notified of the public launch of the App. 12 643 had an existing relationship with these qualified prospective users since they signed up and 13 joined the App's website and became subject to the App's website's terms and conditions. 643 14 did not have a contract with many of these users who never downloaded the App. 643 had plans 15 to send additional emails to these 6,000 users to convert them into license agreements with 643 16 that would have resulted in monthly payments from these users to 643. The decision of these 17 qualified prospective customers to join the App's website and become subject to its terms and 18 conditions demonstrates 643 had an existing relationship with these consumers and a reasonable 19 and objective expectation of prospective economic relations since these qualified prospective 20 customers explicitly took action to indicate they would enter into contract with 643 when 643 21 notified them of the opportunity to do so. 643 did not have the opportunity to convert all of these 22 qualified prospective customers as a direct result ofFacebook's conduct. 23 309. Based upon research 643 conducted regarding user personas likely to download its 24 App, 643 hired at significant expense over 20 contractors to identify consumers likely to enter 25 into license agreements with 643. These consumers converted into qualified prospective 26 customers at a statistically significant and repeatable average rate of 6%, well above industry 27 norms. Approximately 13,000 of these consumers had not yet been contacted by 643. Given the 28 101 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 expense 643 undertook to identify and target prospective customers, and the high and repeatable 2 rate of conversion, 643 had an objective and reasonable expectation of prospective economic 3 relations with these prospective customers. 4 310. 643 purchased advertising campaigns on Facebook using Facebook's mobile App 5 Install Ad product. These advertisements purchased by 643 potentially reached hundreds of 6 thousands ofFacebook users, a portion of which entered into license agreements with 643. 643 7 had an objective and reasonable expectation of prospective economic relations from prospective 8 customers to whom it targeted in these advertising campaigns and in future advertising campaigns 9 643 planned to administer. 10 311. Upon information and belief, around the time Zuckerberg made the decision to 11 implement Facebook's anti-competitive scheme in 2012, Facebook was experiencing substantial 12 difficulty transitioning its service from desktop computers to mobile devices. The executive team 13 was extremely concerned around the impact this transition would have on Facebook's revenues, 14 particularly in light ofthe fact that Facebook was planning an initial public offering (IPO) of its 15 shares around this time. In discussions in 2011 and 2012, Zuckerberg and other members of 16 Facebook's management team, including Lessin, Olivan, Cox, Sandberg, and Bosworth, decided 17 to remove any APis in Facebook Platform that permitted mobile apps to obtain organic growth, 18 including the Graph API Data. Organic growth enabled an app to acquire new users without 19 having to purchase advertising. Facebook built features like the newsfeed APis and full friends 20 list in order to drive organic growth for Developers and represented for many years that organic 21 growth was a key reason a developer should build its business on Facebook Platform. Organic 22 growth was primarily achieved through the newsfeed APis and full friends list, because these 23 APis let potential new users of an app learn about and download the app from existing users 24 without the app needing to purchase advertisements to reach that new user. Upon information and 25 belief, Zuckerberg decided to implement the anti-competitive scheme in 2012 not only to restrain 26 competition to make way for new Facebook products but also to hold hostage the tens of 27 thousands of companies that relied on Facebook Platform for organic growth. By eliminating the 28 102 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 full friend list, friend permissions and newsfeed APis, Zuckerberg placed tens of thousands of 2 companies in an impossible position: either spend hundreds of thousands of dollars each year 3 buying ads with Facebook's new mobile advertising product or shut down the product or 4 business. For companies who could afford it, the choice was clear: give in to Zuckerberg's 5 demands, pony up the cash, and stay in business. Based in significant part upon the 6 representations Facebook made from 2007 until2014 that Facebook Platform was the most 7 effective organic growth and distribution channel for applications, 643 decided to build its 8 business on Facebook Platform because Facebook represented that any friends of643's users 9 were qualified prospective customers who could enter into license agreements with 643 with a 10 single click or tap on a notification from a friend or a post in their news feed. There were 11 approximately 100,000 Facebook users who were friends ofthe 4,481 customers of643, any of 12 whom Facebook represented repeatedly for 7 years could enter into license agreements with 643 13 seamlessly and easily with a single click or tap. In a survey of test users of the App, 75% of users 14 said they were likely to recommend the App to a friend, with 40% saying they already had 15 recommended the App to a friend. All of these friends who had received recommendations from 16 existing users to download the App were prospective customers with whom 643 could now 17 classify as qualified leads. Therefore, 643 had an objective and reasonable expectation of 18 prospective economic relations with these prospective customers and Zuckerberg interfered with 19 643's prospective economic advantage with these customers when he decided to shut down all 20 organic growth and distribution channels in 2012, before 643 was formed as a Delaware limited 21 liability company. 22 312. 643 thus had relationships with the following categories of consumers: its test 23 users (4,481 consumers), qualified prospective customers (6,000 consumers), prospective 24 customers (13,000 consumers), Facebook friends of customers (100,000 consumers), and 25 Facebook users who received 643 's test advertisements (tens of thousands of consumers). In the 26 absence ofFacebook's bait-and-switch scheme, 643 would have obtained future economic benefit 27 above and beyond its current contracts in all of these categories of consumers. 28 103 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 313. 1 The conduct of Zuckerberg and the Conspiring Facebook Executives was wrongful 2 on a number of independent grounds, including violation of California's Unfair Competition law 3 (including violation of the FTC Order), and the common law causes of action for intentional 4 misrepresentation, negligent misrepresentation, and concealment. 314. 5 Zuckerberg and the Conspiring Facebook Executives knew of 643 's relationship 6 with the users or prospective users ofthe App, and knew or should have known of643's 7 marketing and advertising tests of the App and its plans to grow the App both organically and 8 through participating in Facebook's mobile advertising product. 315. 9 Zuckerberg and the Conspiring Facebook Executives negligently disrupted these 10 relationships when they decided in 2012 to privatize Graph API Data. From that moment on, 11 643 's business was operating on borrowed time with no possibility of obtaining economic 12 advantage with prospective customers and yet 643 had no way of knowing this was the case. 316. 13 Zuckerberg and the Conspiring Facebook Executives negligently disrupted these 14 relationships when they decided throughout 2012 and 2013 to fail to provide proper privacy 15 controls for information Facebook sent to 643, requiring 643 to build its own controls at 16 significant cost notwithstanding that Facebook made partial disclosures implying that it handled 17 this user data properly. 317. 18 Zuckerberg and the Conspiring Facebook Executives negligently disrupted 643 's 19 relationships with users and prospective users when they emailed 643 on January 20,2015 that 20 Facebook would end 643 's access to Graph API Data, despite knowing that interference with 21 these relationships would be certain or substantially certain to occur as a result ofFacebook's act 22 in ending 643 's access. 318. 23 Zuckerberg and the Conspiring Facebook Executives further negligently interfered 24 with and disrupted 643's relationships with its users and prospective users when it did terminate 25 643's access on April30, 2015, despite knowing that interference with these relationships would 26 be certain or substantially certain to occur as a result ofFacebook's conduct in ending 643's 27 access. 28 104 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 2 3 4 5 6 7 8 9 10 11 12 319. Zuckerberg and the Conspiring Facebook Executives knew or should have known that this relationship would be disrupted if they failed to act with reasonable care. 320. Zuckerberg and the Conspiring Facebook Executives failed to act with reasonable care by engaging in reckless, negligent, malicious, fraudulent and/or oppressive conduct. 321. 643's relationship with its users and prospective users was thereby disrupted, and will be further disrupted. 322. As a result, 643 suffered damage in an unascertained amount in excess of $25,000.00 to be established according to proof at trial. 323. In taking the actions alleged herein, Zuckerberg and the Conspiring Facebook Executives acted with fraud, malice and oppression, and in reckless disregard of the rights of 643. 324. Accordingly, Defendants Zuckerberg, Cox, Olivan, Lessin, Vernal and Sukhar are liable to 643 for damages. 13 JURY TRIAL DEMAND 14 643 demands a trial by jury on all claims so triable. 15 PRAYER FOR RELIEF 16 WHEREFORE, Plaintiff 643 asks this Court to enter judgment against Defendants 17 Facebook, Inc., Mark Zuckerberg, Christopher Cox, Javier Olivan, Samuel Lessin, Michael 18 Vernal and Ilya Sukhar as follows: 19 20 21 22 23 24 25 26 A. A judgment or order declaring Defendants' conduct, as alleged, unlawful under California's Unfair Business Practices Act; B. A judgment or order declaring that Facebook's conduct, as alleged, constitutes breach of contract; C. A judgment or order declaring that Defendants' conduct, as alleged, constitutes concealment; D. A judgment or order declaring that Defendants' conduct, as alleged, constitutes intentional misrepresentation; 27 28 105 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 E. A judgment or order declaring that Defendants' conduct, as alleged, constitutes negligent misrepresentation; 2 3 F. A judgment or order declaring that Defendants' conduct, as alleged, constitutes intentional interference with contract; 4 5 G. A judgment or order declaring that the conduct of Defendants Zuckerberg, Cox, 6 Olivan, Lessin, Vernal and Sukhar as alleged, constitutes intentional interference 7 with prospective economic relations; 8 H. A judgment or order declaring that the conduct of Defendants Zuckerberg, Cox, 9 Olivan, Lessin, Vernal and Sukhar, as alleged, constitutes negligent interference with prospective business relations. 10 11 I. Ajudgment, order, or award of damages adequate to compensate 643; 12 J. A permanent injunction requiring Facebook to restore Developer access to the 13 Graph API data, including reading the full friends list, friends permissions and 14 newsfeed APis, and all other data and APis available prior to Facebook's removal 15 of the APison April30, 2015; 16 17 18 19 K. A permanent injunction prohibiting Defendants Zuckerberg, Cox and Olivan from interfering with 643 's contracts; L. A permanent injunction prohibiting Defendants Zuckerberg, Cox and Olivan from interfering with 643 's prospective economic relations; 20 M. An award of 643 's reasonable attorneys' fees and costs; 21 N. Punitive damages and/or treble damages as provided by applicable law; and 22 0. Such other further relief as this Court or a jury may deem proper and just. 23 24 25 26 27 28 106 Case No . CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 2 DATED: January 12,2018 CRITERION LAW BIR . 3 4 5 6 a P. Fthenakis, Esq. DavidS. Godkin (admitted pro hac vice) James E. Kruzer (admitted pro hac vice) Attorneys for Plaintiff Six4Three, LLC 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 107 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages 1 PROOF OF SERVICE 2 I, Cheryl A. McDuffee, declare: 3 I am a citizen of the United States and employed in Suffolk County, Massachusetts. I am 4 over the age of eighteen years and not a party to the within-entitled action. My business address 5 is 280 Summer Street, Boston, MA 0221 0. On January 12, 2018, I served a copy of the within 6 document(s): 7 8 9 PLAINTIFF'S FIFTH AMENDED COMPLAINT FOR INJUNCTION AND DAMAGES by electronic service, per the agreement of the parties, by emailing a true and correct copy through counsel's email address to Defendant's counsel of record at the email addresses set forth below. 10 11 12 VIA EMAIL ONLY 17 Joshua Lerner Ulerner@durietangri.com) Sonal N. Mehta (SMehta@durietangri.com) Laura Miller (LMiller@durietangri.com) Catherine Kim (ckim@durietangri.com) Durie Tangri (Service-Six4Three@durietangri.com) 217 Leidesdorff Street San Francisco, CA 94111 p (415) 376- 6427 Attorney for Defendant FACEBOOK, INC. 18 VIA EMAIL ONLY 19 Judge's Copy Department 2 Superior Court of California, County of San Mateo 400 County Center, Courtroom 2E Redwood i ty, CA 94063 13 14 15 16 20 21 22 23 24 I declare under penalty of perjury under the laws of the State of California that the above is true and correct. Executed January 12, 2018, at Boston, Massachusetts. 25 26 Cheryl A. McD~L::::: 27 28 108 Case No. CIV 533328/Plaintiffs Fifth Amended Complaint for Injunction and Damages 1 232. Upon information and belief, from 2007 through at least 2015, Facebook willfully, 2 intentionally, recklessly, maliciously and negligently failed to pass privacy or age information 3 when sending Developers Graph API Data. This required Developers, including 643, to incur 4 enormous costs in order to comply with user privacy settings and age restrictions. Facebook made 5 repeated public disclosures that withheld this fact. Upon information and belief, at all times, the 6 employees involved in this project were acting under the direction and approval of Zuckerberg 7 and Vernal. Had Facebook fully disclosed that it did not respect user privacy settings or age 8 requirements when accessing information through third party apps, 643 would not have invested 9 in or continued to invest in its business. 10 233. Upon information and belief, at least by 2013 and continuing at least through 11 2015, Facebook continued to explore and implement ways to track users' location, to track and 12 read their texts, to access and record their microphones on their phones, to track and monitor their 13 usage of competitive apps on their phones, and to track and monitor their calls. For example, 14 upon information and belief, Facebook expanded its program to access and monitor the 15 microphone on Android phones in 2015 without securing the explicit consent of all users and 16 while only providing partial disclosures as to what information was being obtained and for what 17 purposes it was being used (see, e.g., 18 https://www.facebook.com/help/community/question/?id=974781930088 and 19 https ://www. cnbc. com/20 17I 10/3 0/facebook-denies-listening-to-user-conversations-via- 20 microphones.html). As another example, upon information and belief, Facebook has not fully 21 disclosed the manner in which it preprocesses photos on the iOS camera roll, meaning if a user 22 has any Facebook app installed on their iPhone, then Facebook accesses and analyzes (using 23 facial and other image recognition) the photos the user takes and/or stores on the iPhone (see, 24 e.g., https://www .facebook.com/help/community/question/?id= 10209909027988265). Facebook's 25 partial disclosures regarding iPhone photo access and what information it gleans from the photos 26 have been woefully deficient. Upon information and belief, at all times, the employees involved 27 28 84 Case No. CIV 533328/Plaintiff's Fifth Amended Complaint for Injunction and Damages fB Event and Face book Platform FAQ What Is f8? f8 was an event held at the San Francisco Design Center on May 24 , 2007, during which Mark Zuckerberg unveiled the next evolution of Facebook Platform. The event included an eight-hour "hackathon," where both Facebook engineers and outside developers collaborated on building new applications on the new Facebook Platform. What Is a "hackathon"? A hackalhon Is an all-night coding event during which Facebook engineers work on any project that Interests them. Face book uses the word "hackamon" to refer to a gathering of engineers, who possess technica l expertise and collabora te on Innovative projects . Facebook has a tradition of holding frequent developer hackathons, which have spawned some of the most popular features and applications on the site. What Is Facebook Platform? Facebook Platform is a development system that enables companies and developers to build applications for the Facebook website, where all of Facebook's 24 million active users can Interact with them . Facebook Platform offers deep integration Into the Facebook website, distribution through the social graph and an opportunity to build a business. What Is the social graph? The social graph is at the core of Faoebook. It is the network of connections and relationships between people on Face book and enables the efficient spreading and filtering of Information. Just as people share Information with their friends and the people around them In the real world, these connections are reflected online In the Facebook social graph. What is a Facebook application? A Facebook application uses Facebook Platform to access Information from the social graph , offering us.ers an experience that's relevant to them. Facebook applications can plug Into the Facebook webs ite In a number of ways: applications can be embedded on users' profile pages , res ide on their own separate pages (called ''can vas" pages) , or live through desktop applications using data from the Facebook social graph. What's new In Facebook Platform? We've been adding functionality since Facebook Platform first shipped In beta In August 2006 . With the latest evolution of Facebook Platform however, third-party developers can now create applications on the Facebook site with the same level of Integration as applications built by Internal Facebook developers. Now developers everywhere have the ability to create Facebook applications that deeply Integrate Into the Facebook site, as well as the potential for mass distribution through the social graph and new business opportunities. Why did Facebook launch Facebook Platform? Our engineers have created great applications for Facebook, but we recognized that third-party developers ca n help us make Facebook an even more powerful social utility. Facebook Platform gives developers everywhere the tools to create applications that we just wouldn't have the resources to build In-house, and those applications make Faoebook an even better way for our users to exchange Information. Developers also benefit from Facebook Platform as It gives them the potential to broadly distribute their applications and even build new business opportunities. What kinds of applications can be built on Facobook Platform? The kinds of applications developers can build on Facebook Platform are limited only by their Imaginations. Because appl ica tions are based on the Facebook social grapn they can be more releva nt to users, keeping people In touch with what and whom they care about. We've already seen a variety of app lications built by our developer partners, Includ ing those for sharing media files, book re views , slldeshows and more . Some of the 156 University Avenue • Palo Alto, CA 94301 • T: 650-543-4800 • F: 650-543-4801 possibilities of Facebook applications are Illustrated in the Facebook Platform Application Directory, available at http :1/www. facebook.com/apps. Are there any restrictions on what developers can build? Developers are encouraged to exercise their creativity when building applications. Of course , all applications a·e subJect to the Terms of Servlce that every developer agrees to, which Include basic requirements such as not storing any sensitive user Information, not creating any offensive or illegal applications , and not building anything tha! phlshes or spams users . And users will always have the power to report any applications that coh'lpromlse Facebook's trusted environment, keep ing our users' information safe. What are the benefits of Facebook Platform for users? With Facebook Platform, users gain the ability to define their experience on Facebook by choosing applications that are useful and relevant to them. Now that they have access to a virtually limitless set of applications from outside developers, users have an unprecedented amount of choice. They can share information and communicate with their trusted connections In ways that would never have been possible before Facebook opened its platform. How do users add applications to and remove applications from their account? If a user sees an application she likes on a frlenc! 's profile , she can add It to her account by clicking the "Add" link on the application's profile box. She can also add new applications by navigating to the application's specific page In the Facebook Platform Application Directory and clicking "Add Application" lh the top-right corner. To remove an application, she first clicks "Applications" on the left navigation bar. From there , she can "Remove" any of the applications in her account, whether they are built by a developer partner or by Face book. What are the privacy controls for Facebook Platform, and what kind of user Information can be shared? On Facebook, users are always In control of their Information and can choose how much of their Information Is made available to specinc applications . With Face book Platform, we're offering additional privacy controls and requiring that third parties !real user Information with the same respect we do-and our users have come to expect. Users can also choose to comple'tely opt out or making the ir data available through Facebook Platform. Applications can never violate users' basic privacy settings and are meant to provide users with a better opportunity to share their Information with their friends and networks. What do third-party applications do with user Information? Applications bull! by third parties are required to respect Facebook users' privacy preferences. Third-party applications allow users and their friends to share Information in new ways, without affecting the security and privacy that they've always enjoyed on Facebook. How many applications are there for Facebook Platform? At fB, we are launching with over 85 applications from more than 65 developer partners, and that's only the beginning. We're encourag ing interested developers everywhere to create Facebook applications. We have no limits on the number of applications that can be created. What differentiates Facebook applications from widgets on other sites? Facebook applications are deeply integr<:~ted Into the site and take advant~ge of the network of real connections throug h which users share Information and communicate-what we call the "social graph." Widgets are typically single-purpose Flash add-ons to a web page (I. e, displaying a single video) that are not fully Integrated Into a site nor are aware of the social context among users. How will Facebook maintain Its minimalist style If users can add and move applications around on their profile? We 're giving our users the choice to add appllcetJons and control their placement In their profiles, but we're not changing the essential layout and familiar style of the Facebook site. Facebook applications are focused on providing new ways to spread Information on Facebook , not about redesigning the way a profile looKs. For example, users will nol be able to change the site background , add music that plays when their profiles load, or 156 University Avenue • Palo Alto, CA 94301 • T: 650-543·4800 • F: 650·543-4801 Insert animation Into their profiles. Individual applications may play media, music or animations but only when a visitor to that profile interacts with them. How will Face book deal with applications that compete with one another or even compete with Facebook· bu ilt applications? We welcome developers wlth competing applications, Including developers whose applications might compete wlth Facebook-bullt applications. Many applications are likely to offer similar features. We've designed Faoebook Platform so that applications from third-party developers are on a level playing field With applications built by Facebook. Ultimately, our users will decide which applications they find most useful, and It Is these applications that will become the most popular. How will Facebook monetize Facebook Platform? All the great applications built by our developer partners provide a service to our users and strengthen the social graph. The re sult Is even more engaged Facebook users creating more advertising opportunities . Can Facebook applications Include ads? We want to enable developers to build a business on their Facebook applications , so we 're giving developers the fre edom to monetize their applica tions as they like . Developers can Include advertising on their applications' canvas pages, though no adve rtising will be allowe.d within the application boxes that appear within user profiles. Are you going to share revenue with developers? While revenue sharing Is not availab le-at launch, we are-looking Into ways to share advertising revenue with developers. This version ol Facebook Platform already lets developers monetize their applications as they like, whether they choose to offer It for free or build a business on their application. What are the key technical elements of Facebook Platform? Facebook Platform offers several technologies that help developers use data from the social graph. In addition to the Facebook API, this recently launched version of Facebook Platform Introduces Facebook Markup Language (FBML), which enables developers to build applications that deeply Integrate Into the Facebook site. Facebook Platform also Includes Fac book Query Lang(J age (FQL), which lets developers use a SQL-style Interface to query the data they can access through the API. For more details on the technology behind Facebook Platform, check out the Facebook Developer site at http ://developers .facebook.com. ### 156 University Avenue • Palo Alto, CA 94301 • T: 650-543-4800 • F: 650-543·4801