Rhode Island Pension Sues Google Over Investor Harm From Data Breach

The pension fund alleges Google harmed investors by failing to disclose that personal information of its users had been compromised.

(Chris Ratcliffe/Bloomberg)

(Chris Ratcliffe/Bloomberg)

Rhode Island’s pension fund is suing Google parent company Alphabet for allegedly hiding privacy breaches tied to its social media network.

The Employees’ Retirement System of Rhode Island filed a motion this week in the U.S. District Court for the Northern District of California to lead a shareholder class action lawsuit against Alphabet. The pension alleged in a December 11 statement that Google executives failed to disclose privacy breaches that compromised personal information of 52.5 million users.

“Google had an obligation to tell its users and investors that private information wasn’t being protected,” Rhode Island General Treasurer Seth Magaziner said the statement. “Instead, Google executives decided to hide the breaches from its users and continued to mislead investors and federal regulators.”

The company discovered in March that a software glitch exposed personal data of Google Plus users to third parties but did not disclose the incident partly because of fears of regulatory scrutiny, according to the motion, which cited a Wall Street Journal story from October. Shares of Alphabet fell on the news, causing “substantial harm to investors,” the pension claimed in the court document.

People use Google Plus to communicate with their families, friends, and coworkers, and “ostensibly have the ability to share and restrict the sharing of personal information,” the pension fund said in the document.


According to the motion, Senator Richard Blumenthal announced at a congressional hearing in October that he would ask the Federal Trade Commission to investigate the data privacy breach tied to Google Plus, the company’s social media network. That same month, Google said it would shut down the consumer version of Google Plus.

The company announced this week that it was expediting changes to the online social network due to a new software bug.

“We have confirmed that the bug impacted approximately 52.5 million users in connection with a Google+ API,” David Thacker, vice president of product management, said in a December 10 blog. “We fixed the bug promptly and began an investigation into the issue.”

Google did not immediately respond to an email seeking comment about the data breach and lawsuit.