Whether you’re a small startup or a Big Tech goliath, there’s a pretty simple rule when it comes to investors: be honest with them. Turns out, Twitter’s investors feel that the company hasn’t been entirely transparent with them, and the microblogging platform has proposed an $809 million settlement for a lawsuit they filed back in 2016. The suit alleges that the company misled its investors about its user engagement figures, which are important in determining growth metrics.
Twitter in trouble
The suit describes a 2014 event Twitter held where it provided allegedly misleading growth projections, reports The Verge. At the time the company said that its monthly active users would double to over 550 million by 2018, with revenue going up by $4.6 billion in the same amount of time.
See, Twitter’s definition of an ‘active user’ is a little loose. At least, according to the suit it is. Before 2014 it used to include user timeline views as the primary growth indicator, but dropped it off for less suitable indicators. If a user so much as logged in that month just to shut up an automated message asking where they’d been for so long, they made the cut.
This muddies the actual value of an ‘active user’ as a growth metric, and makes it a bit harder for data analysts to plot and project Twitter’s growth. Hence why investors feel misled.
According to The Verge, Twitter plans to use the cash it has on hand to settle with investors later this year. If they’re satisfied with the amount, that is.
Twitter’s not the only big-wig being taken on by its own supporters at the moment. Blizzard’s shareholders filed a lawsuit against it in August alleging that information relating to the California DFEH had been withheld from them, and that they were thus misled regarding the value of their shares.