EXHIBIT B 

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 1 of 46
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

4 Of counsel:

David S. Godkin (admitted pro hac vice)

Andrew A. Caffrey, III(admitted pro hac vice)

BIRNBAUM&GODKIN, LLP

280 Summer Street

Boston, MA02210

(617) 307-6100

godkin@birnbaumgodkin.corn

caffrey@birnbaumgodkin.corn

PllLRB

Sgg P r'TEO COUNTY

FE8 0 6 'l3ik

Qsr,, . Couth

10 'Attorneys for Plaintiff,

SIX4THREE, LLC, a Delaware

limited liabilitycompany

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SUPERIOR COURT OF CALIFORNIA

COUNTY OF SAN MATEO

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SIX4THREE, LLC, a Delaware limited

liabilitycompany,

Plaintiff,

FACEBOOK, INC., a Delaware corporation

'and DOES 1 through 50, inclusive

Defendants.

) Case No. CIV 533328

)

) SECOND AMENDEDCOMPLAINTOF

) PLAINTIFF, SIX4THREE, LLC, FOR

)

INJUNCTION AND DAMAGES FOR:

)

1. VIOLATIONOF CALIFORNIA

) BUSINESS AND PROFESSIONS CODE

) g$ 17200 ET SEQ.;

) 2. PROMISSORY ESTOPPEL;

)

3. NEGLIGENT MISREPRESENTATION;

) 4. INTENTIONALINTERFERENCE

) WITH CONTRACT; AND

5. INTENTIONALINTERFERENCE

WITHPROSPECTIVE BUSINESS

RELATIONS.

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Plaintiff, Six4Three, LLC, alleges as follows:

1. This matter concerns Defendant Facebook, Inc.'s campaign ofpromises,

enticements, and representations to third-party software developers ("Developers" )

such as

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Case No. CIV 533328

1

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 2 of 46
PlaintiffSix4Three, LLC ("643"), to develop applications for Facebook, based on Faccbook's

2 representations that Developers would have a level playing field, fair competition, and an

3 opportunity to grow their business. Facebook's campaign was part of a calculated strategy to

4 drive Facebook's own growth by leveraging the hard work ofDevelopers. But once Facebook

5 decided it would prefer to no longer compete with Developers, it abruptly reversed course, and

6 broke its promise offair competition in Facebook's platform. Facebook's conduct here is a classic

7 "bait and switch" tactic that is barred by California law, as detailed below.

PARTIES

9, 2. Plaintiff643 is a Delaware Limited LiabilityCorporation with a principal place of

10 business at 535 Mission Street, 14th Floor, San Francisco, California.

11 3. On information and belief, Defendant Facebook, Inc., is a Delaware Corporation

12 with a principal place of business of One Hacker Way, Menlo Park, California.

13 4. Plaintiffis ignorant ofthe true names and capacities ofthe Defendants sued herein

14 as Does 1 tlirough 50, inclusive, and each ofthem, and therefore sues said Defendants by such

15 fictitious names. Plaintiffwill amend this complaint when the true names and capacities ofsaid

16 'Defendants have been ascertained. Plaintiffis inforined and believes and thereon alleges, that

17 Defendants Does 1 through 50, inclusive, and each ofthem, are legally responsible in some

18 manner for the events and happenings referred to herein and proximately caused or contributed to

19 the injuries to Plaintiffas hereinafter alleged. Wherever in this complaint any Defendant is the

20,subject of any charging allegation by Plaintiff, it shall be deemed that said Defendants Does 1

21 tluough 50, inclusive, and each ofthem, are likewise the subjects ofsaid charging allegation.

22 5. Plaintiffis informed and believes, and thereon alleges, that at all times herein

23 mentioned, each ofthe Defendants was the agent and employee of each ofthe remaining

24 Defendants and, in doing the things herein alleged, was acting within the course and scope ofsaid

25 agency and employment.

26 FACTS

27 6. 643 is an image pattern recognition startup company„

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Case No. CIV 533328

2

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 3 of 46
1 7. Facebook operates a social networking service that enables users to connect and

2 share information with their fiiends and family.

3 8. Facebook refers to the network ofrelationships between its users as the "Graph" or

4 the "Social Graph."

5 9. The Facebook Developer Platform (also called "Facebook Platform")

enables

6 Developers to make their applications and other services available to Facebook users.

7 I. LAUNCH.OF FACKBOOKPLATFORMIN 2007

8 10. At 3PM PDT on May 24, 2007, Mark Zuckerberg, Facebook Founder and CEO,

9 made a self-described revolutionary announcement to a crowded rooin ofsoftware developers in

10 San Francisco. Zuckerberg announced the launch ofI acebook Platform, which he had described

11;weeks earlier in an interview with Fortune magazine as "the most p'owerful distribution

12 mechanism that's been: c'r'eat'cd;:in."a icncration." He went on in the Fortune interview to describe

'J3 the mo'tivation for creating Facebook Platform in this way: ".We want to make Facebook into

14 'something> of.an:.opeating svstcm:so vou'can:run'full:apphcations;" specifying that this

15 development was the internet-equivalent to what Microsoft did with Windows, which allowed

16 other developers to build applications for PCs. (See

17 http://archive. fortune.corn/2007/05/24/technology/facebook.fortune/index.htm.)

18 '

l. In fact, Zuckerberg's first demonstration ofFacebook Platform was purportedly to

19 BillGates in early May 2007. Microsoft and Facebook had reached an agreement for Microsoft to

20 purchase banner ads on Facebook in which Microsoft had guaranteed Facebook a minimum of

21 $ 100 millionper year tlirough 2011. Facebook Platform was positioned by Facebook to MicrosoA !

22 as the driving force behind meeting Facebook's ambitious growth metrics. Atthe time ofthis

23 announcement, Facebook had just exceeded 20 million active users and had raised only $ 37.7

24 millionin venture capital investment. Even at this modest point in Facebook's growth, its photo

25 sharing application was the largest photo application on the Internet, and according to Facebook's

26

'n the quoted text here and elsewhere in the Second Amended Complaint, representations by

28

Facebook or its employees have been underlined for emphasis.

3

Case No. CIV 533328 Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 4 of 46
1 own internal statistics, drew more than twice the traffic ofthe next three photo sites combined at

2 the time ofthe May 24, 2007 announcement ofFacebook Platform.

3 12. Zuckerberg announced that the three key elements of Facebook Platfoim were

4 "deep'i'ntcgration. mass distribution:.a'n'd ncw oivportunitv. " These were three key themes he

5 would repeat throughout the day and for years to come in numerous public conversations and

6 presentations. (See https://gigaom.corn/2007/05/24/live'-at-the-facebook-launch/.)

7 13. 'Thus, Zuckerberg made three distinct promises: (1) promise of deep integration

8 with Facebook's social graph; (2) promise ofFacebook's support in achieving mass distribution

9 ofdeveloper applications; and (3) promise of an opportunity to build a business on Facebook.

10 14. By 8PM that evening, these key elements were memorialized on Facebook's

website with the official aimouncement "Facebook Platform Launches", stating "Y'ou.":caii".n'o'w":

12 build::applications: that%ave the.same'access-'to integration in'to;-the-.social'raph as.Faceb'ook'3

applications, such as photos, notes, and events.... The, power ofmass distribution is now in vour

14 hands. You. can, gain distribution for.vour appliCat'ions through the social graph like never before.

15:Applications.can be v'iral1'v engiriecred."to'each iiiillions,".ofFaccb'ook users ciuicklV~and efficientlv",

16 through the profile, news feed,. and mini-feed..... With.access to deep.'in'tegra'tion into the site, and,,

17 mass distribution'{hro'ugIi.the social graph comes a new opportunity for vou to build a business

18 with.vour application. You are free to monetize vour canvas pages through advertising or other

19 transactions. that vou control." (See Facebook Platform Launches,

20 http://web.archive.org/web/20070706002021/http: //developers.facebook.corn/news.php?blog=l k

21 .story=21).

22 15. Facebook's announcement thus promised that (1) developers have "same access to

23 integration" for applications such as photos and notes as Facebook employees; (2) developers are

24 able to distribute applications through Facebook Platfoim; and (3) developers are able to

25 monetize applications through Facebook Platforin.

26 16. Zuckerberg went on to say: "Tlie social graph is our'ase, arid we'e bui1t':a

27, framework that is completely op'tiiuized..for. developiri'g social applications''witliin oui':-'8

.environment.... We believe that there is more value for evervone in letting other people develop.

4

Case No. CIV 533328 Plaintiffs Second Amended Complaint for Injunction a'nd Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 5 of 46
1 atinlications on top ofthe base we'e built than we could ever uossiblv nrovide on our own

2 This is good for us because ifdevelopers:build i~eat applications then.thevire,providing a.service

3

'o our users and stren'ptheninp the social graph:... This is a bip opportunitv; We provide the

4 intemation and dist'r'ibiitio'n and develop~ers rovide the applications. We help users share more

5, i'nformation, and 'together we.'benefit,'

17. Zuckerberg thus promised that Facebook is committed long term to serving as a

7 platform that lets developers build applications on a level playing field because it is a big

8 opportunity for everyone.

9 18. Zuckerberg then announced that Facebook had been working with over 70

10 developers in anticipation ofthe launch ofFacebook Platform, including Amazon, Forbes, iLike,

Lending Club, Microsoft, Obama for America, Photobucket, Red Bull, Twitter, Uber, Virgin

12 Mobile USA, Warner Bros, Washington Post, and many others. (See live blog ofF8 event from

13 'eading Internet blogger, Mashable, at http://mashable.corn/2007/05/24/facebook-f8-

14 live/1ClfbgFfPV5q0.)

15 19. Around 4PM during Zuckerberg's presentation, he announced 5 case studies from

16 these early developer partners aimed at showing how easy it was for all developers to integrate

17 with Faceb'ook Platform. Zuckerberg distributed case studies from Red Bull, Box.net, Lending

18 Club, Microsoft and Slide.corn. Zuckerberg continued to emphasize during this public, annual

19 keynote to Developers that Facebook Platform is the single biggest and most revolutionary

20 change to Facebook since its inception, stating: "4'verv once:.in a w'heal'e a;blat'foim'''corn'es'alohi

21 'that allows pconle'to buil'd-'a'conitiletelv new:application —.. sometimes even starts new, industries.,"

22, (See https://gigaom.corn/2007/05/24/live-at-the-facebook-launch/.)

23 20. GigaOm, a leading Internet blogger, live blogged the event and further quoted

24 Zuckerberg as saying: "Withphoto-sharing, he explained, 'it's not just the photos that spread, it'

25 the whole photos application'.'-Third'-gart'v aurihcations won't be treated like second-class citizens

26 'on.Facebook, h'e saws; users can add them to their profiles and drag them and drop them to their

27 content. Applications can use Flash, JavaScript, and Silverlight ifa user approves them. Outside

28 applications can issue unlimited notifications to users, and fitinto the Facebook enviromnent by

.5

Case No. CIV 533328 'laintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 6 of 46
1 accessing a 'fiiend selector'hat spits out each users'onnections. Now Zuckerberg says you can

2 serve ads on your app pages and keep all the revenue, se 1 them yourselves or use a network, and

3 process transactions within the site, keeping all the revenue without diverting users off

4 Facebook." (See https://gigaom.cond2007/05/24/live-at-the-faccbook-launch/.)

5 2i. Zuckerberg thus promised that (t) develoI!er applications won' be "second class

citizens", (2) developer applications can access a user's connections and related user data made

7 available in the social graph; and (3) developer applications can sell ads through the Facebook

I

8

! Platform.

9 . 22. This grandiose language from Zuckerbergt obviously sparked substantial questions

10, from the developer community so by 4:20PM pacific (1 hour and 20 minutes after the keynote

11 had started), Facebook had released the official "Facebook Platform FAQ", which was being

12 'circulated among bloggers to educate developers further qn this announcement. (See Exhibit 1,

13,Facebook F8 and Platform FAQ.) The Facebook Platform FAQ states, among other things:

14 ', What is Facebook Platform? Facebook Platform is a development systein that enables

15 companies and developers to build applications for the Facebook website, where all of

16, Facebook's 24 million active users can interact with them.'Pacsebook'Pl'atform offers'deep

17,inteiiratioiuin the Facebo'ok website . disotribution through the social maph! and''an'.

18 '.op'por'tunitktonbiiild,aubiisin'essa,

19

20 'hat's new in Facebook Platform? We'e been adding functionality since Facebook

21 .,;

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'3,

24

Platform first shipped in beta in August 2006. With the latest. evolution. ofFacebook

.PI'astfo'rnid haowcVci';dthrird-'p'aitv".'dc'veiotpcrs ca'n:nowlcreate appii'cations on'tlie F'acebook

.site with.the same level ofintegration as applications built bv internal Facebook

developers.,'Now'developers-evervw'here.have the a'bihtv todcreate Faeeb'ook ipplicrcatitiiis

25 that deeplv intemate into the Facebook site„as wel as the potential for mass distribution

26 throiiili'tlic.so'cial. t'pra'ph aiid 'ii'ewubusiness oppoituriities,

27 Why did Facebook launch Facebook Platform? Our engineers have created great

g p y p p e

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Case No. CIV 533328 Plaintiff's Second Amended 'Compl'aint for Injunction and Damages

28 applications forFacebook,butwereco nized that tthird- art develo erscanhel usmak

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 7 of 46
Facebook an even more powerful social utility. Fnccbook PI'atforni:gives developers.

everywhere:the'tool's to create applicati'ons that we just wouldn't have the resources to

build in-house, and those applications make'Facebook an even better way for our users to

exchange information. Developers also benefit from the Faccbodk Platform as it gives

them the potential to broadly distribute their applications and even build new business,

o'pp'ortuiiities

What kinds of applications can be built on Facebook Platform?, The kinds of

applications-",developers can build.on Facebook Platform are"'li'initc'd"only-bv tlieir

i'xiii'ginatioiis,'Because"applications are based on the Facebook- social'. graph thev can'be

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,more. relevant to users, keeping pleo le in to'u'ch with what and whom thev care about.

We'e already seen a variety of applications built by our developer partners, including

those for sharing media files, book reviews, slideshows and more. Some ofthe

possibilities ofFacebook applications are illustrated in the Facebook Platform Application

Directory, available at http://facebook.corn/apps.

Are there any restrictions on what developers can build? Developers'ar'c eii'cou'ra'gcd

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to exercise their creativity when, building applications. Of:course. all applications. are.

~sub'ect to the Terms of Service. that everv developer agrees to, which include basic

reauiiciA'ends/stlch,as.not stori'ng an'y s'ensiti've user'in fol'lilati'on; not crc'ating.anv, offensive

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or. illegal applications, and not building anything that:.phfshes:or spams users. And users

will always have the power to report any applications that compromise Facebook's trusted

enviroiunent, keeping our users'nformation safe.

22:

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How willFacebook deal with applications that compete with one another or even

compete with Facebook-built applications? %e'welcome.developers-w'ith:competing

applications, in'cludi'ng developers whose applications might compete.with Facebook-built

26 ', applications, Ma'tiy. applications'are likclv..to 6ffer'sin>ilar"fca'tures; We'v'e'.designed

27 1""acebook'Platform so.that:applications fr'om thircl-p irt'y:developers.:are'on a level plavinw~

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Case No. CIV 533328

field with applications built bv Facebook. Ultimately. our users willdecide which

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Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 8 of 46
~alications thev find most useful, and itis these applications, that willbecome the most

p'opul'ar.

Can Facebook applications include ads? We want to enable.'developers. to build a

business on their Facebook.applications, so we'.rc eving,developers the freedom,to.,

idion'etiRe:tli'eir.appli'c'ations'as th'cy like'.,Developers can include advertising on their

applications'anvas pages, though no advertising willbe allowed within the application

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boxes that appear within user profiles.

Are you going to share revenue with developers? While revenue sharing is not

available at launch, we are looking into ways to share advertising revenue with

developers.... The version ofFac'cbook Platform already lets."devel'oper's'monetize their

applications as they like„,whether they. choose to offer it for free or to build a business on

their application.

14 23. In sum, these representations by Facebook reflected the followingpromises to

15 Developers:

16 a. Developers would have "deep integration";

17 b. Developers would have access to the "social graph";

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23:

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c. Developers would have "an opportunity to build a business."

d. Developers would have the same level ofintegration and ability to develop apps in

the same manner as internal Facebook employees;

e. Facebook willprovide adequate tools necessary for Developers to build their

applications;

f. Facebook willhelp Developers achieve broad distribution oftheir applications;

g; so long as applications abide by Terms of Service (e.g. are not offensive or

unlawful), Facebook willbe neutral as to the applications built on its operating

system;

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Case Vio. CIV 533328

8

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 9 of 46
h. any application that does not violate Terms of Service, phish or spam users,

contain offensive material, or break the law shall be accepted in Facebook

Platform;

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i. competing applications are welcome on Facebook's operating system;

j. Facebook willremain neutral among competing applications;

k. Facebook willremain neutral among its own applications and those of developers

regardless ofwhether they compete or not;

l. applications similar in purpose and content willbe allowed to compete on a "level

playing field"

m. "level playing field" constitutes a definition offairness in market competition, and

that definition offairness means that ultimately users willdecide which

applications win the market, not Facebook or other third parties;

n. implicitin this definition offairness 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;

o. Facebook willenable Developers to build businesses on their operating system by

directly monetizing their applications on Facebook;

p. Developers willbe able to sell ads on their application pages; and

q. Developers willhave a choice as to whether they monetize their application on

Facebook's operating system.

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II. DEVELOPERS RESPONDED ENTHUSIASTICALLYTO THKLAUNCHOF

FACEBOOK PLATFORM.JUST:-AS:FACFBOOK INTENDED

25 24. The blogging community went into an immediate and prolonged frenzy over this

announcement. Paul B. Allen, founder ofAncestry.corn and well known Internet blogger,

27 summed up the general sentiment expressed by countless bloggers when he wrote that same day,

28 "Isaw history in the making today...I was lucky enough to be in San Francisco for the Facebook

9

Case No. CIV 533328 Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 10 of 46
1 f8 Platform launch event. This announcement was at least an 8.0 on the Richter scale. It was a

2 whopper.... A huge new opportunity was presented to the few hundred people in the room,

3 including 65 companies that have spent the last few weeks developing applications for the launch

4 ofFacebook Platform. Facebook is inviting anyone to develop applications for their users on top

5 ofwhat Mark calls their "social graph" —the core oftheir service which basically keeps track of

6 real people and'their real connections to each other....[Facebook's] growth willbe dramatically

7 . accelerated by the Platform announcement. IfFacebook is adding 100,000 new users per day with

8 its own few simple applications (like its photo sharing, a very simple service that has given

9, Facebook twice as many photos as all other photo sharing sites combined), what willhappen

10 when thousands or tens ofthousands ofdevelopers start building apps in Facebook and marketing

11 them to more users? Facebook willreach 50 million, then 100 million, then 200 millionusers, and

12 beyond. Rather than continue to try to develop features within its own proprietary, closed

13 network, basically keeping all ofits users to itself...Facebook intuitivelygets the concepts that

14 are so brilliantlydiscussed in Wikinomics (which are so non-intuitive to old schools business

15 'types), and has chosen to open up its network for all to participate in...Application developers

16 can now have access to core Facebook features, such as user profiles and user connections, and

17 even publishing to the News Feed, all with the control and permission ofFacebook users... When

18 Facebook has 100 millionusers, in the not too distant future, having the ability to develop an App

19 in their system willalmost be like being able to get a link on Google's own home page." (See

20 http://www.paulallen.net/prediction-facebook-will-be-the-largest-social-network-in-the-world/.)

21 25. To Developers, Facebook Platform represented not just an entire new operating

22 system, but an ecosystem that could potentially reorganize the entire Internet (potentially

23 replacing Google). The sentiment amongst Developers, as widely held throughout the industry

24 'and reported by popular sites like TechCrunch (http://techcrunch.corn/2007/05/24/facebook25 launches-facebook-platform-they-are-the-anti-myspace/) and the Wall Street Journal

26 (http://www.wsj.corn/public/article/SB117971397890009177-

27 wjdKPmjAqS 9ZZbwiRp CoSqvwQ 20070620.html), was that ifyou aren' building for

28 Facebook, you willbe left behind.

Case No. CIV 533328

10

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 11 of 46
1 26. Facebook and the Developers who were selected to participate in the private beta

2 ofFacebook Platform quickly set out to inakc Developers comfortable with this grandiose vision

3 and create a level of comfort to induce them to participate in this entirely new industry. For

4 instance, on May 29, 2007, just five days after Zuckerberg's announcement ofFacebook

5 Platfoim, Venture Beat, the popular tech blog, did a QKAwith iLike founder, AliPartovi, who

6,was also an early advisor and shareholder of Facebook. iLikewas the first successful application

7 on Facebook Platform and for quite some time was the largest music application on the Facebook

8 'Platform. iLikewas purchased by MySpace in 2009.

9 Tell me about your experiences with Platform so far. You'e been working on putting

10 iLike on Facebook for several months now. Yet on the integration since Friday mornin,

11 there have been bugs and other issues on iLike's end. What's the status?

12 Partovi: So, first to give you the back-story on how we got involved'. Over the past several

13, months, we'e pushed and pushed with Facebook asking for some sort of exclusive

14 'elationship. They repeatedly said they won't do an exclusive relationship but would

15 rather create a level playing field where we could compete with other third parties. Wc

16 then gave up a bit, and we were actually a bit late to the game learning about the platform

17

18

in detail. But when we finallydid get access, our President, Hadi Partovi (my twin

brother) took very little time to decide this was a huge strategic priority. That was a month

19 ago. We re-prioritized everything else, and started moving our people offother projects

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21

22

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'nto this. First two or three people, then a few more, and by the end it was a huge group of

engineers pulling back-to-back all-nighters for a week-long sprint to the launch.

What made iLike think that Facebook Platform would be a big deal? What stood out about

it?

24

25 '.

26

27

Hadi has a strong background in the concept ofplatforms...at 24 he became the head of

product management in the IE group at Microsoft, and was a key player in thc browser

wars. A month ago, even though the Facebook Platform wasn't fullyfleshed out, he saw

just from the early beginnings ofit that this could redefine web development. What he

28

Case No. CIV 533328

said was, 'in the history of computing, there was the personal computer, there was

11

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 12 of 46
1 Windows, there was the web, and now the Facebook Platform'. You can imagine that I

2 and most our company was pretty skeptical. But he makes these calls so we followed him.

3 As to what stood out, it's a combination ofthree things: (1) the technology itself—

4 Facebook Platforiii, like any platform, offers the developer building blocks to build apps

5 faster than they could ifthey were starting from scratch, and to tap into a rich source of

6 data &capabilities that would never otherwise be available; (2) the potential for viral

7 spread —due to the way the Facebook news feed works, an app can spread across the

8 community entirely by viral spread, as friends get notified when one person adopts

9 it...this essentially bypasses the idea oftrying to make your app 'viral's a standalone,

10 because Facebook is itself naturally viral; (3), 11ie'ihetori'c:,',fr'om-the Pa'cebook:man'agenieiit'.

11:,.team, starting from the CEO himself. made it clear that thev have a long-term

12:;commitmcnt: to. a level'@laving-field. For examnl'e.,thee-i>bsolutelv'-'reR'sed to'ice us any.,

13

14

.sgecial advantape,.insisting that the market needs to see. a level.Tilavina.f]e]d...we offered .

,.tlicm':oiviier'sh'in'.i'ii'Cur'c'om'iianv. nionev„:etc'-. but:thev. h'ad.bio:ititerest:, FiirthcriTiorc;:thev

15 .built and launched. their own 'video'. app, but left it to 'compete'n its own merits

16 ,alongsi'de other" third-.'painty apps ra'ther than makiiiu:it"pre-inst'all'ed': for'a11.1'aceb'ook

17 users; .So. fkI";a~i'd '52,ina'de'this:. something we had to''iud",on.'"and:@3;:made: us comfortable.

18 'wi'ththe I'one-tcrin sti'ate'eiCiino'Iicatio'its . (See http://venturebeat.corn/2007/05/29/qa19 'ith-ilikes-ali-partovi-on-facebook/.)

20 27. Partovi's comments immediately followingZuckerberg's announcement serve

21 both to reflect the general sentiment held by Developers —that Facebook had made clear its long

22 tenn commitment to a level playing field for Developers —and to show how Facebook's allies

23 (Partovi was an early advisor and shareholder after all), were committed to helping Facebook

24 grow its new operating system quickly and induce developers to participate with large

25 investments of capital. After all, iLike saw massive growth in the two years followingits decision

26 to build on the Facebook Platforin and was ultimately acquired by MySpace in 2009 in large part

27 due to that growth.

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Case No. CIV 533328

12

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 13 of 46
III.FACKBOOKCONTINUED TO ACTIVELYPROMOTE FACKBOOK

, PLATFORM TO DEVELOPERS

2

28. Three days after Partovi's QUA with Venture Beat, on June 1, 2007 Facebook

3

released its own statement further clarifying its intentions with Facebook Platform, entitled

4

"Platforin is Here".

5

",Last Fridav,, we gr'oniised more information..so here it is.... With this evolution-,of

6

Facebook Platforin, we'e made it so that anv developer can build the same applications

that we can. And bv that, we mean that thev:.can integrate 'their-application into

9

Facebook—into the 'soci'al graph—the same wav that our, ap'nlications like Photos and

'No't'es are'i'nte'ki'ated, "

(See https://www.facebook.corn/notes/facebook/platform-is10

here/2437282130/)

11

29. Thus Facebook promised that developers willbe able to build applications in the

12

saine way that Facebook can by accessing the social graph.

13

30. As recently as February 23, 2016, this representation remained available on

14

Facebook's web page.

15

31. Throughout the summer of2007 Facebook remained on the offensive about its

16

long-term commitment to developers on Facebook Platform. Facebook held numerous

17

Hackathons and Developer Meetups in various cities to introduce new developers to Facebook

18

Platform, it launched a Developer Feed and Wiki on its website to educate the Developer

19 community on the benefits ofFacebook Platform and help them more seamlessly invest their

20

capital and resources towards building applications on the Facebook Platform. Facebook also held

21

contests with prizes for developers. 'Zuckerberg continued to emphasize the revolutionary impact

22

Facebook Platform would have on the Internet as a whole during this time. For instance, on July

23

'17, 2007, Zuckerberg was interviewed by Time Magazine:

24

Time: the frenzy suivounding Facebook seems to have intensified quite dramatically over

25

26

27

28

the past several months. What do you think is behind the company's newfound cachet?

Zuckerberg: I think the most recent surge, at least in the press, is around the launch of

Facebook Platforin. For the first time we'e allowing developers who don't work at

Case No. CIV 533328

13

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 14 of 46
1 Facebook to develop applications iust as ifthcv were..That's a bio. deal because it means

2

thai. all developers "trave a'new'ivav-:of doi'n'g business ifthev choose to take advantage of.

3 it. There are whole:coin'panies that are fondling whose only product is a Facebook

4 Platforin application. That pro'vides an o'pu'or'turiitv"foi'hai> it'provides an:ou6orhinitv foi

5 p'eople who want" to make monev"bv investing in.those:comgani'es„and I think tha't's

,

s'ometh'in''th'at's'ni'ettv exc'itin@'to'h'e'business.comm'unity. "

(See

7 http://content. time. corn/time/business/article/0,8599,1644040,00.html)

8 32. In these public statements to Time Magazine, Zuckerberg made at least four

9 distinct promises: (1) Facebook would allow developers to build applications as ifthey were

10 developers employed by Facebook; (2) Facebook would offer developers on Facebook Platform a

11 'ew way of doing business; (3) Facebook would support an ecosystem where entire companies

12 could be formed whose sole business activity was within the Facebook Platform ecosystem; (4)

13 Facebook would support an ecosystem where investors could reasonably rely on Facebook to

14 make money by investing in companies solely devoted to the Facebook Platform ecosystem.

15 33. Then on September 17, 2007, Facebook went even further by setting up a $ 10

16 million fund exclusively devoted to providing grants to developers to build on Facebook

17 Platform. Facebook and its partners in the fund would not even take equity in the developer; they

18 were offering free money to build applications on Facebook Platform with the only commitments

19 being that the grantee use the money to build on Facebook Platform and that Facebook's partners

20 would have the opportunity to invest first ifthey were interested in doing so. When asked why

21 Facebook was forming this fund, itreplied: "We'ari"forinirikthis'kind.to-;h'el@.',cow the.Faceb'ook

22 application ecosvstem.'Bv.'decreasing the barrier to start a companv, we hone to entice an even

23 larger gn oup.of people to become;enti epreneur's-and"build 'a'comiiel'lin'i-business':on.'Fabcb'o'ok'.

24 Platform. We hope, this is also a funding. model that other. venture eapitahs'ts.will follow. "

(See

25 http://500hats.typepad.corn/500blogs/2007/09/facebook-announ.htrnl.)

26 34. Facebook's conduct in providing free money to developers to build applications on

27 Facebook Platform implies a specific proinise that it willsupport developers'pportunity to

28 "build a compelling business on Facebook Platform" and that it is committed long term to the

14

Case No. CIV533328 Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 15 of 46
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 35. Indeed, others were quick to followFacebook'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 after established that invested solely in Facebook applications. In

7 September 2007, Wired Magazine reported the following: "And by turning itselfinto a platform

8 for new applications, Facebook has launched a whole new branch ofthe software development

9 industiy, just like BillGates 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.corn/techbiz/startups/news/2007/09/ff facebook? currentPage=all.)

1

14: 36. As a result of Facebook and its partners tremendous efforts in inducing Developers

t

15 'to build applications on Facebook Platform and promising them the opportunity to build entire

16 industries, new sectors ofinvestment and new types of applications, Facebook Platform quickly

17 'became, in the words ofAdWeek, "the most viral software distribution system ever". The overall

18 'rafficto Facebook increased by one third within a mere three weeks ofthe announcement. By

19 December, the Facebook user base had gone from 24 million at the time ofthe announcement to

20 58 million, a'141'/o increase. Where Facebook had been adding about 100,000 new users per day

21 i prior to Facebook Platform, it was now adding more than 250,000 users per day. (See

22 http://www.adweek.corn/socialtimes/top-10-facebook-stories-of-2007/211540.)

23, 37. While it touted Facebook Platforin 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.

26 38. By the end of2009, in large part due to the Facebook Platform's success in

27 inducing developers to make investments in this new ecosystem, Facebook's user growth had

28

Case No. CIV 533328

15

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 16 of 46
1 skyrocketed from 24 millionactive users at the time ofthe announcement ofFacebook Platform

in May 2007 to over 350 millionusers in December 2009.

3 39. In late 2009, Facebook released a document "ALook Back on the App Economy

4 ofFacebook in 2009," in which it cited numerous success stories. For instance, Facebook app

5 Playfish was acquired by Electronic Arts that year for no less tlian $ 275 million. Watercooler, a

6 leading fantasy sports application on the Facebook Platform, successfully raised $ 5.5 millionto

7 fuel its growth. Weardrobe was acquired by Like.corn for an undisclosed sum. The document,

8 published by the Director ofthe Facebook Developer Network, ended: "We'd like to say thank

9 you to the developers and entrepreneurs who make up the Facebook Platform ecosystem and

10 congratulations on your accomplishments in 2009." (See

http://web.archive.org/web/20091223055629/http: //developers. facebook.corn/news.php?blog= 1 &

12 story=351.)

13 IV.FACKBOOKLAUNCHEDGRAPES"API IN2010

14 40. On or about April21, 2010, Facebook announced the launch ofGraph Application

15 Programming Interface ("Graph API")

as a key new component of Facebook Platform at its

16 developer conference. Graph API allows Developers, with the consent of a I'acebook user, to read

17 data from and write data to Facebook.

18 '1. Developers can only access Facebook content (referred to as "endpoints") with

19 explicit permission from the user. Examples of endpoints include a user's birthdate, favorite

20 athletes, or photos.

21 42. Graph API also permits access to endpoints regarding a user's friends. One such

22 'endpoint is the set ofphotos that a user's friends had chosen to share with that user (the "Friends'3

',Photos Endpoint" ). Auser's friends can control access to their photos and other endpoints by

24 Developers even ifthey are not users ofthe Developer's application.

25, 43. By granting Developers access to the Iriends'hotos Endpoint, Facebook allowed

26 Developers to build applications that enabled a Facebook user to search the user's friends'hotos

27 via a Facebook Platform application, assuming the user's friend explicitlyprovided such

28 'ermission. A user's friend had complete control over the permission settings. For instance, the

16

Case No. CIV 533328 Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 17 of 46
1 user's friend could provide access to all or no developers or to specific developers but not others,

2 as the user's friend saw fit.

3 44. During the announcement of Graph API, Facebook touted several features of

4 Graph API in order to increase its appeal to Developers such as 643.

5 45. Specifically, at the F8 Conference 2010, Zuckerberg announced: "The open graph

6 puts people at the center ofthe web —it means that the web can become a set ofpersonally and

7 meaningfully semantic connections between people... Three years ago at our first F8 we launched

8 Facebook Platforin, and together we all started an industry... We think what we have to show you

9 today willbe the most transformative thing we'e ever done for the web...Use the open graph.to.

10 'make it.so that! people":ca'n leave'instantly soci'al and per'son'alized.experiences'.ev'er'ywhere they.go;

11 We'e Norma be announcine a few pieces ofnew technology that make this possible —the first is

12 the Graph API,—makes it completely, simple t'o read connections to Facebook's map ofthe

13 'gdapll.'..impplein'ented;on top'of'aii:open'sfandarii.-" (See

14 https://www.youtube.corn/watch? v=4SOcRKINiSM.)

15 46. AfterZuckerberg completed his keynote at F8 2010, Bret Taylor, a Facebook

16 employee, further explained what Graph API meant for developers: "With Graph API every

17 object in Facebook has a unique ID, whether that object is a user profile, event, etc...you just

18 need to download an object with a new ID or download a connection with a new name. So to

19 download my friends you just need to download /btaylor /friends... And this applies for every

20;single object in Facebook. So let's say Facebook launches a new feature next year. We':re:riot'1

gonna make vou "do'wnload a.new, SDK, You iust need to download an obiect with a,new. ID or"

22 dowiiload a connection'.@itli a'n'tv"'na'nic. A11'of'f)le code!you already wrote willc'ontinue'to".wo'rk

23 'perfectly., This is a really siiJii6cant chaiii~e''fo!r our.net-'platforin that I'rn sure you'a''4

appreciate. For the first time via the search capability, ofthe Graph API, we'e, giving developers

25 'the capability to search over all the public updates on Facebook. I think this is Lonna lead to a

26 bunch of cool new applicali'ons and I'm really excited to see where people go with this:;;. We'e

27,built our core, ofthe',Facibook Platform. from the ground up with siniplicitv, stability, and the

28

Case No. CIV 533328

17

Plaintiff's Second Amended Complaint for Injunction an'd'Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 18 of 46
1 maph in mind. This graph that for the first time we'e building to@ether," (See

2 'ttps://www.youtube.corn/watch? v=4SOcRKINiSM.)

3 47. Facebook's employee Bret Taylor thus promised that: (1) developers can access

4 Graph API objects in a simple manner ("you just need to download an object with a new ID"); (2)

5 the accessible objects are ubiquitous ("this applies for every single object in Facebook"); (3) this

6 access willbe sustained and can be relied upon by developers ("Allofthe code you already wrote

7 will continue to work perfectly... We'e not gonna make you download a new SDK") (a SoAware

8- Development Kit(or "SDK")is a set ofsoftware development tools that allows for the creation of

9 'applications for a particular development platform); (4) developers can search over all objects for

10 all public updates on Facebook; and (5) Fa'cebook Platform guarantees simplicity, stability and

11 your ability to access and help build the graph with us.

12 48. The software industry uses a common and well-known convention ofreferring to

13 software by version number (e.g., version 1.0, 2.0, etc.) to signify the existence ofseparate

14 versions ofsoftware and to identify a particular version ofthe software. When Facebook

15 announced the launch of Graph API, it did not refer to Graph API as having different versions.

16,Facebook thereby signified that Graph API's open, equal, and neutral nature would not change.

17 This representation was of course a deliberate decision on Facebook's part to continue to entice

18 developers by conveying a sense ofsecurity around investing time, money and effort building

19 applications on its revolutionary platforin.

20, . 49. Facebook did not represent that it had reserved the right to terminate any endpoint

21 ofGraph API. To the contrary, Facebook repeatedly expressed its long-term commitment to this

22 API.

23 50. This extension ofthe Facebook Platform ecosystem to further expand its

24 'eorganization potential for the entire Internet contributed even further to Facebook's meteoric

25 rise and induced even more investors and developers to expand the industry Facebook had

26 created. By way of example, on October 21, 2010, Facebook partnered with Kleincr Perkins

27 Caufield 8c Byers, Zynga and Amazon to launch a $250 million fund to invest in new apps on the

28 Facebook Platform. By September 19, 2011, Facebook Platform had created over 182,000 jobs

18

Case No. CIV 533328 Plaintiffs Second Amende'd Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 19 of 46
and $ 12.19 billionin value to the U.S. economy. Facebook now boasted over 850 millionusers as

2 oflate 2011.

3 51. On September 24, 2011, Facebook further extended its long-term commitment to

4 Facebook Platform by expanding Open Graph to accelerate its reorganization ofthe disparate

5 content on the Internet. (See http://mashable.corn/2012/05/24/facebook-developer-platform6 infographic/1fDCxuACag5qr.) In his keynote address at F8 2011 on Septeinber 24, 2011,

7 Zuckerberg stated to a packed auditorium ofdevelopers: "The next era is defined:bv the apps and

8 .depth of engagement ih'at.is now possible now that this whole network'has.been established... In

9 2007 in our very first F8:I.introduced the concept ofthe social graph. all ofthe relationships

10,between..pc'o'pl'e in the.C'orld;, Last-'year. we intr'odu'ced'.th'c c'oncep't oftheopcn.griiph as:no't only

11 the m'ap o'f''all:tlie'relNfiori'ships':but:all'of'the'connections in the world....: This"ye'ar We'r'e takin'g

12 the next step: we',re going to make it so that. you can, connect to 'aiiy'thin'g.you want in any way

13 you w'ant;..; ..So'm'ctim'cs.I think about what we're'doingwith the: open" gripli'is-heipiii'g"to'efiiie.a

14 brand new language for how people connect...every year we take the next step.and make.soTY}e

15 iie'w s'ocial!appkjxi'ssib'le; op'en~eaph enable&apps 'that fo'cus'pr'iniarilv-on.two,:.types ofthings-:

16 the:first'is.'foal'ling out your:.timeline, and the second:is"helpirig'yoii discovci.ncw',things'.tlir'ough

17 your-,:friends;:"

18 52. Facebook thus made at least four distinct promises in this September 24, 2011

19 announcement: (1) Facebook has a long-terin commitment to the Facebook Platform and ensuring

20 a fair playing field for developers and has had such a commitment for over four years now; (2)

21 Facebook is committed to extending the Facebook Platform to provide developers with more

22 ways to innovate and build businesses; (3) in keeping with this long term commitment, Facebook

23 . willcontinue to help make new kinds ofsocial apps possible; and (4) Facebook is in particular

24: focused on helping you discover new things through your friends and Facebook Platform will

25 enable developers seeking to do so.

26 '3. 643 relied upon these representations, and others, as to the fair, level playing field

27 and the open, equal, and neutral nature ofFacebook's Piatforin and Graph API, and invested

Case No. CIV 533328

19

Plaintiffs Sccorid Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 20 of 46
considerable time, energy, and money developing an application to make use ofGraph API on

2 Facebook's Platform.

V.,THE FTC ORDERED FACKBOOKNOT TO MISREPRESENT THE MANNE<R

INWHICHFACEBOOK PROVIDES ACCESS TO USER. DATA

5

54. On or about July 27, 2012, the United States Federal Trade Commission ("FTC")

entered a Decision and Order (the "FTC Order") against Facebook.

7

55. The FTC Order entered following a consent agreement between FTC and

8

Facebook.

9

56. The FTC noted in the FTC Order that the FTC had reason to believe Facebook has

10 violated the Federal Trade Commission Act.

11 57. 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

13 which it maintains the privacy or security of covered information...."

14, 58. The FTC Order defined "covered information" to include an individual

consumer's photos, among other things.

59. 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]

18 'makes or has made covered information accessible to third parties."

19 VI.INDECEMBER..2012..PLAINTIFF 643 BECA'ME:A.FACKBOOKDEVELOPER

ANDBE'GAN.DEVELOPINGAN.APPLICATION.

20

21 60. In December 2012, 643 entered into the Facebook Developer Platform, which

permitted 643 to develop applications using the Graph API.

61. 643 has developed a unique automated image classification capability, which it

24, used to develop an application called Pikinis ("the App"). The App was available for download

on any iOS-compatible device, including the iPhone and iPad. The App enabled Facebook users

to reduce time spent searching by automatically classifying photos that their friends have shared

27 with them through Facebook's network, assuming their friends have provided such permission to

28

i Developers.

Case No. CIV 533328

20

Plaintiffs Second Ame'nded Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 21 of 46
1 62. The App required use of Facebook's Graph API, and specifically the Friends'

Photos Endpoint. The App used 643's pattern-recognition technology to search through shared

3 photos and identify those oftheir friends at the beach or in the summer.

4 63. The App could only be used to sort through photos that a user's friend had chosen

5 to share with that user based on the friend's Facebook privacy settings. 643 conducted initial user

6 research that indicated considerable consumer demand for the App, among both men and women.

7 Facebook has never expressed any disapproval ofthe App as the only content it accesses is

8 content already available on Facebook.

9 64. 643 made plans to market and promote the App to attract users.

10 65. 643 sold the App for $ 1.99 in Apple's App store. The basic version ofthe App

: allowed a user to run a certain number ofsearches per month. In addition, users could choose to

12 pay for premium access, which allowed unlimited searching. 643 offered different pricing tiers

13 for premium access, ranging from $ 1.99 for a monthly subscription, to $ 6.99 for 6 months, to

14 $ 9.99 for 12 months.

15 . 66. Facebook benefits from the work ofDevelopers such as 643 who create

16 applications for use with Facebook. These applications can enhance user experience and drive

17 traffic to Facebook's website and mobile app, which in turn generates revenue for Facebook

18 through advertising sales, its primaiy revenue stream. It is no secret that Facebook's'meteoric rise

19,from 24 millionusers in 2007 to almost 1.6 billion users in 2016 rested in significant part on the

20 release and growth ofFacebook Platform.

21

22

VII. FACEBOOKRE-ITERATED ITS.PROMISES'RELATED TO GRAPH API

AND FACKBOOKPLATFORMAT ITS 2014 FS CONFERENCE

67. The extension ofthe Graph API at F8 2011 was simply the next step in Facebook's

23

long term commitment to serve as a platform for other developers, a commitment that every

24

statement and action it took since May 2007 (a period ofwell over 4 years) reaffirmed without a

25

shadow of a doubt. The extension ofthe Facebook Platform continued to accelerate the massive

26

economy Facebook had built. By January 2012, Facebook Platform had created 232,000 jobs in

27 'he EU alone, amounting to $ 15.3 billionofvalue to the European economy. By February 2012,

28

Case No. CIV 533328

21

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 22 of 46
1 250 millionpeople were playing games on Facebook Platform each day (that is 12 times more

2 people than the average viewership ofAmerican Idol, the highest-rated TV show in the history of

3 television). By April 2012, 7 ofthe 10 highest grossing apps in the Apple App Store werc built on

4 Facebook Platform. (See http://mashable.corn/2012/05/24/facebook-developer-platform5 infographic/1fDCxuACag5qr.) It should be noted, in large part due to its long-term commitment

6 to the Facebook Platform, Facebook exceeded 1 billionusers in 2012.

7 68. By April 30, 2014, at the 2014 F8, having accumulated over 1.3 billionusers,

8

'acebook decided that certain parts ofthis massive application ecosystem it had built (along with

9 hundreds ofthousands ofdevelopers and billions ofdollars of outside investment capital) were

10 better kept to itself. Despite having made this decision, Facebook made numerous promises that it

11 explicitlynever intended to keep. Zuckerberg announced during his keynote: "This is gonna be a

12 different kind ofF8. In the vast we'e had F8 w'hen we'e bad a big product announcement or

13,new direction we'were'Coins~ in..This:alwavs:meant a lot of different chances-for vour alps.,Now

14 we'e focused on building a stable'mobil'e platform; You'rc'trvin'e to:build meat:-mobile:apns'and

15 busii~'e'sscs;: A'nd w'o want to brihi~ this':.community.toietlier onc'e ver"vcar.t6'tall< about:all'the .

16 different':th'inzm were doinz to sunnott'-vou. %c'vc.heard:froin'. You'.that vou''w'aint'.to iae Faceboolc

17 Platform to do 3 things. Help vou build, mow and monetize vour alps.."

18 69. Thus, Zuckerberg reiterated the promise that Facebook had expressed to

19 developers unequivocally for over seven years now: that Faccbook is committed in the long term

20,to helping them build, grow and monetize their apps.

21 70. Zuckerberg continued: '!As Isaid'we'.re reall'v.'focused:on', building';a stable"mobile

22 platform. And one thing vou mav not know, is tliat all ofour mobile a@vs axe built on top ofthe

23 .verv same platform and APIs that vou,guvs use when vou're writing Facebook and all our

24,engineers use the same tools and read all the same documentation that vou do.... It's reallv.

25 .i'mpo'rtant,for vou"an'd for all''ofour teams internallv.fhat w'e"build.stable and.,cffici'ent

26 'in&astructure.tlult vou can rely on for the long~ term. So tlus:has been areallv'big focus for us.... I

27 want to start today bv going through a few thini~s we'e doine to make our platform even more

28 stable and reliable for vou to build, grow and monetize your apps, You want to be able to build

22

Case No. CIV 533328 Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 23 of 46
1 somethine and know that it's Lonna be able to work for a while. So todav for the first time we'e

2 introducing a 2-'vear.stabilitv puarantue for- all. of our. core API platforms...so even ifwe chango

3 these core APIs in the future. we're:i~uaranteeing that we'e going.to keen supporting them as is

4 for at least two years and maybe longer from the time we make that'.change; We'e still.gonna

5 'experiinent with new features and diffeicist:thihes but wc're':iioi>na''mark them as beta'so vou

6 know what's gonna be'gait.of this core stable platform. We'e also introducing API versioning

7 This is something we want to make sure that all the apps we wrote two'vears,'apo keen workinp.

8 Th'is is sonfcthi~ii" w'e w'an'te'd.in'teinallv'as we"build;6n.'this.ulat'form,.so'isow eVerythiiij~ is gonna':

9 be versioned so vou set to decide which version ofthe API.vou.get to build against."

10 71. Accordingly, Zuckerberg made at least four promises that: (1) Facebook continues

to provide a level playing field to developers where developers use the same tools as Facebook

12 employees to develop apps; (2) Facebook continues to be committed in providing developer

13 'access "that you can rely on for the long term"; (3) Facebook promises that for all ofits core API

14 endpoints it willguarantee their stability for no less than two years going forward; (4) Facebook

15 promises that it willlet developers choose which version ofthe API they would like to access as

16 'it introduces API versioning ("This is something we want to make sure that all the apps we wrote

17 two years ago keep working. This is something we wanted internally as we build on this platfoiin,

18 so now everything is gonna be versioned so vou'e~t:to d'ee'ide which version ofthe API you get to

19 build against.").

20 72. Many developers initiallyapplauded Zuckerberg's 2-year stability guarantee and

21 the ability to let developers choose which version ofthe API to build against. One blogger

22 applauded Facebook's commitment to developers in noting: "Facebook co-founder and CEO

23 .

'Mark Zuckerberg announced a two-year stability guarantee for all ofthe company's core APIs

24 and platforms. In fact every API launched by Facebook willnow be versioned, and developers

25 willbe able to choose which version to build on." (See

26 http://thenextweb.corn/facebook/2014/04/30/facebook-announces-two-year-stability-guarantee27 core-apis-sla-fix-major-bugs-within-48-hours/1gref ) TechCrunch and many other bloggers also

28 reported on the API Guarantee, stating that developers "willbe able to build with confidence

23

Case No. CIV 533328 Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 24 of 46
1 knowing that a core API willbe available for at least two years". (See

2 http://techcrunch.corn/2014/04/30/facebook-api-guarantee/.)

VIII.,FACKBOOKTlIL<"NIMPLEMENTEDPOLICIES THATDEPARTED

,RADICALLYFROM ZUCI<KRBKRG'8;ANNOUNCKMKNTATFS 2014

73. Unfortunately for the Developer community, Zuckerberg's announceincnt directly

5

contradicted the policy that Facebook immediately began implementing that very day.

6

Zuckerberg's statement that Developers, like Facebook employees, would be able to choose

7

which API to use was simply false, and he must have known this statement to be false at the time

8

he made it as only hours later Facebook sent Developers a notice that the Graph API they had

9

come to rely on and upon which Facebook had enticed them to invest billions ofdollars around

10

was to be permanently retired in one year. Zuckerberg explicitlyomitted and contradicted the

11

one-year lifespan of Graph API during his keynote address. But given that Zuckerberg's

12

announcement and the notice to developers occurred on the very same day, Zuckerberg must have

13

known ofthis change while making his statements and approved ofsuch changes in advance.

14

74. Moreover, the 2-year stability guarantee turned out not to apply to the original

15

Graph API and only to future APIs. Thus Facebook pulled the rug out from under the Developer

16

community and took full econoinic advantage ofthe ecosystem Developers had built, but

17

Zuckerberg's keynote address still generated sound bites consistent with his previous

18

representations that Facebook was maintaining a fair and level playing field for Developers.

19

Zuckerberg was forced to make statements he knew at the time to be false precisely because it

20

was obvious to everyone in the developer community, especially Zuckerberg, that Facebook had

21

for seven years been making clear and unambiguous promises to developers that they could rely

22

on Facebook Platform over the long term to provide a fair playing field and to enable developers

23

to build businesses.

24

25

75. Finally, Graph API explicitlyremoved endpoints that were ofhigh value to

Developers, like the ability to access Photos, which for years Facebook had touted as one ofits

26

most valuable and highly trafficked features in order to entice developers to build applications.

27

Facebook's only justification for removing access to photos was that this endpoint was "rarely

28

Case No. CIV 533328

24

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 25 of 46
1 used", which contravenes every public stateinent Facebook had previously stated for over seven

2 years in which Photos were consistently touted as its 1I application and driver ofuser

3 engagement, an application that captured more photos and traffic than the next three photo sites

4 on the Internet combined.

5 76. Facebook's behavior ofintentionally inducing Developers to build Facebook's

6 business and then pulling the rug out from under them is a repeated pattern in Facebook's growth

7 stoiy. It is not an isolated incident simply related to Graph API versioning and the thousands of

8 developers, like 643, whose businesses were destroyed by this bait and switch tactic.

9 77. As an example, Facebook recently executed another bait and switch tactic that

10 caused thousands ofDevelopers to go out ofbusiness and lose countless millions of dollars of

11 enterprise value and capital investment. At the same time that Zuckerberg pulled the rug out from

12 Developers using photos and other endpoints in the Graph API at F8 2014, he also announced

13 Facebook's acquisition and reliance on Parse as its new preferred tool for developers to build on

14 Facebook Platform. Parse was a popular development platform for creating applications for

15 Facebook, which handled much ofthe back-end functionality ofsuch applications, allowing

16 Developers to focus on features that matter to users. Zuckerberg stated in the same keynote where

17 he announced the Graph API 2.0: "One ofthe'things we'e really excited about offering is

18 Parse...We make it easy to focus on your app, the thing that willget you users and make you

19 money...and Parse takes care ofall the rest." A Facebook employee who followed Zuckerberg on

20 stage went on to note that they had expanded the free tier to make it easier to grow on Parse,

21 giving developers "unlimited requests, unlimited recipients, free analytics". Zuckerberg then

22 finished his thoughts on Parse by saying "We'e excited, we'e aligned with your app, and we

23 hope that it does get huge."

24 78. As a result ofthis and many other similar statements and actions by Facebook,

25 hundreds ofthousands ofDevelopers began using Parse to build applications on Facebook

26 Platfoim. Parse's platform on Facebook states: "From startups to the Fortune 500, hundreds of

27 thousands ofdevelopers trust us."

28

Case No. CIV 533328

25

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 26 of 46
1 79. Then, abruptly, on January 28, 2016, Facebook announced that Parse would be

2 shutting down: "We have a difficultannouncement to make. Beginning today wc're winding

3 down the Parse service, and Parse willbe fullyretired after a year-long period ending on January

4 28, 2017. We'e proud that we'e been able to help so many ofyou build great rnobilc apps, but

5 we need to focus our resources elsewhere." The statement continues: "We understand that this

6 won't be an easy transition... We know that many ofyou have come to rely on Parse, and we are

7 striving to make this transition as straightforward as possible."

8. 80. Many developers immediately commented on the devastating effect this would

9 . have on their app, business and investment in the Facebook Platform. One developer wrote:

10 "@Parselt Wow... Have spent months optimizing my app with your service to launch soon, and

11 now this... Seems sudden... 1utterlydisappointed." Another: "@Parselt it would be nice to hear a

12 little bit more about the need to focus your resources elsewhere." "@ParseIt my app had 2.5M

13 users on your platform...this is sickening."

14 81. The incident with Parse demonstrates a continued clear pattern on the part of

15 Facebook to make clear and unambiguous promises to developers, to engage in conduct that

16 induces developers to make substantial investments oftime and money (a11 ofwhich helped make

17 Facebook one ofthe most valuable companies in the world today), and then Facebook seems to

18 think that it can violate these promises with impunity the moment it becomes convenient for them

19 to do so.

20 IX.PLAINTIFF643'.RECEIVED NOTICE FROM FACEBOOK THATITS APP

WOULDNO'LONGER EUNCTION

21

82. On January 20, 2015, Facebook sent an email to 643 stating that 643 must

22

"upgrade" the App to Graph API v. 2.0 by April 30, 2015. The email stated that Facebook would

23

end third-party access to the Friends'hotos Endpoint on April 30, 2015. The App willnot

24

function at all without access to the Friends'hotos Endpoint, so Facebook's suggestion that 643

25

"upgrade" the App to Graph API v. 2.0 was not possible.

26

83. By deciding to end access to the Friends'hotos Endpoint, Facebook has made it

27

impossible for 643 to continue to operate the App, to abide by the license agreements and

28

26

Case No. CIV 533328 Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 27 of 46
1 purchase terms entered into by 643 with its users, and for 643 to recoup any ofits investinent of

2 capital, huinan labor, time, effort, and energy.

3 84. 643 has sold approximately 5,000 copies ofthe App since its beta launch. A

4 substantial portion ofApp users have paid for premium access. 643 was not able to execute its

5 full public launch as a result ofFacebook's decision.

6 85. Each one ofthe. App users entered into a license agreement with 643.

7 86. Facebook requires Developers to enter into license agreements with users of

8 applications for Facebook. These license agreements must, among other things, require that the

9 users ofthese applications adhere to Facebook's terms ofservice.

10 87. Accordingly, Facebook knew, or had reason to know, about the existence of 643's

11 license agreements with its users.

12 88. Had Facebook refrained from ending access to Friends'hotos Endpoint, 643

13 could have quickly begun to generate hundreds ofthousands of dollars ofrevenue on a monthly

14 basis.

15 89. In total, 643 expended approximately $ 1.15 millionin capital and uncompensated

16;labor by its team members in developing and marketing the App.

17 90. 643 attended Facebook events for Developers and made known the harm caused

18 verbally and via email to the appropriate Facebook employees.

19 91. Faced with the imminent loss ofits investment, 643 wrote to Facebook on March

20 16, 2015, and informed Facebook that its decision to discontinue access to the Friends'hotos

21 Endpoint would harm 643 in several ways. 643 informed Facebook that it had reasonably relied

22 on Facebook's representations that the endpoints would remain open, and that Developers would

23 .have an equal opportunity to integrate applications into the social graph.

24 92. 643 requested that Facebook continue to permit Developers to have access to the

25 Friends'hotos Endpoint.

26 93. 643 alerted Facebook to the considerable harm it would suffer should access be cut

27 off. 643 also noted that some ofits users had entered into subscriptions that extend beyond the

28 .April 30, 2015, cut-offdate, and that these users could be entitled to refunds oftheir purchases.

27

Case No. CIV 533328 Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 28 of 46
94. Thus Facebook had actual knowledge ofthe contracts 643 had entered into with its

2 users. In addition, Facebook had actual knowledge ofthe prospective economic relationships 643

3 expected with its users, as well as Facebook users generally.

4 95. On or about April30, 2015, Facebook did end access to the Friends'hotos

5 Endpoint.

6 96. As a result of Facebook ending access to the Friends'hotos Endpoint, the App no

7 longer functions.

8 97. On information and belief, Facebook has been working on its own applications

9 'using image recognition.

10 98. On June 15, 2015, less than two months after closing access to the Friends'hotos

11 Endpoint for Developers, Facebook announced the launch of "Moments," which allows users to

12 "sync" photos they have taken with their friends and, using Facebook's facial recognition

13 soAware, allows users to search photos that their friends have shared with them. See

14 http://newsroom.fb.corn/news/2015/06/introducing-moments/ (last accessed October 27, 2015).

15 99. Instagram is an on-line photo sharing service that Facebook acquired in 2012.

100. In June 2015, just two months after Facebook closed access to the Friends'hotos

17 Endpoint, Instagram announced enhancements to its Search and Explore features, which allow

18 users to search through photos that have been shared with that user on Instagram.

19 101. On information and belief, in addition to 643, other Developers have been

20,adversely impacted by Facebook closing access to certain endpoints of Graph API, including

21 'riends'hotos.

22 102. On September 21, 2015, the Wall Street Journal reported that Facebook's decision

23 to restrict access to Graph API has caused a drug addiction researcher to halt his research efforts,

24 shut down a voter-registration tool used by the 2012 Obama campaign, and decommissioned an

25 app designed to help first generation college students connect with one another. Deepa

26 Seetharaman % Elizabeth Dwoskin, "Facebook's Restrictions on User Data Cast a Long Shadow;

27 Curbs disrupt startups, academic research and even political strategy"," THE WALLSTREET J.,

28

Case No. CIV 533328

28

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 29 of 46
Sept. 22, 2015, at B1 (available at

2 http://www.wsj.corn/articles/facebooksrestrictionsonuserdatacastalongshadow1442881332).

3 103. The Wall Street Journal also reported in the same article that Facebook reached an

4 unspecified compromise with dating app Tinder that permitted some form of access to photos of

5 mutual friends.

6 104. Facebook has not offered 643 a coinprornise that would permit the App to function

7 and even ifFacebook were to make such an offer, the harm to 643 is irreparable as its team

8 members have moved on to new employment and its code has been fullyretired.

9 105. Instead, the only proposed teclinical "fix"by Facebook was to create an offline,

10, searchable cache ofFacebook's users'hotos. But this solution (1) on its face violates

Facebook's own terms, (2) would not permit the App to function as originally intended and in the

12 same manner it had been, and (3) could result in a grave and substantial abuse ofuser trust,

13 violate user privacy, and gut the core principle of an individual's ownership and control oftheir

14 own data.

15 106. Facebook did not terminate access to the Friends'hotos Endpoint for the purpose

16 of enhancing user privacy, as users already possessed complete control over such data. Instead, it

17 took these actions for the purpose ofimproperly monopolizing for itselfthe ability to access the

18 data previously accessible through the Friends'hotos Endpoint and other terminated endpoints,

19 and to create applications based on those data. As a result ofthese actions, users now have less

20 control over this data. They are not permitted to share it with other applications they trust but only

21 .with Facebook.

22 107. In sum, Facebook acts as a platform when it wants to exploit Developer creativity

23 and resources, and a monopolist when it wants to secure areas ofthe ecosystem for itself once

24 developer creativity and resources have been invested.

25 108. As set forth above, Facebook made repeated, clear, and unambiguous promises

26 upon which many developers, including 643, relied, over a period ofmore than seven years, and

27 which were broken by Facebook. These broken promises directly and substantially harmed 643,

28

Case No. CIV 533328

29

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 30 of 46
nullifyingits investment oftime and money and making it impossible to generate revenues and

2 profits.

3. 109. Facebook deliberately baited, induced, and enticed (through countless promises in

4 both words and conduct) developers to help turn Facebook from a website that had raised $ 37

5 million and secured 24 millionusers to a company that is now one ofthe most valuable

6 enterprises in the world.

7 COUNT I: VIOLATIONOF BUSINESS AND PROFESSIONS:CODE~'85.1 7200 et sea.

[Against all Defendants]

110. 643 re-alleges and repleads paragraphs 1 through 109 as though set forth fully

9

herein.

10

111. Facebook's representations and conduct were designed to, and did, entice 643 and

other Developers to create applications for Facebook with promises of, ainong other things, a

12

level playing field, fair competition, and a chance to build a business. Facebook decided to open

13

'certain endpoints, and not others, precisely to induce developers to build certain types of

14

applications, including advanced photo-searching applications. Facebook promised Developers

15

that their own advanced photo-searching applications would be treated on a level playing field

16

with any photo-searching applications Facebook decided to launch in the future. Facebook also

17

promised developers it was committed over thc long term to enable Developers to build

18

businesses using advanced photo-searching applications.

19

112. Facebook caused substantial harm to 643 and other Developers when it then

20

decided to terminate Developers'bility to build advanced photo-searching applications, while

21

retaining its own ability to create these kinds of applications, because 643, like other Developers,

22

had invested considerable time and resources in developing this kind of application for Facebook.

23

113. The efforts by 643 and other Developers helped to drive user adoption of

24

Facebook by enhancing user experience, thus creating substantial additional revenue and user

25

base for Facebook's benefit.

26

114. In addition, Facebook took advantage ofthe market research and development

27

efforts by 643 and other Developers, which proved that advanced photo-searching applications

28

Case No. CIV 533328

30

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 31 of 46
1 represented a massive market, perhaps one ofthe most attractive markets to help Facebook grow

2 its revenues going forward, as evinced by Facebook's recent announcement of "Moments", its

3 own photo searching application (see "Facebook Moments is a Smarter Photo App —Much

4 Smarter, in Wired Magazine, June 15, 2015, http://www.wired.corn/2015/06/faccbook5 moments/).

6 115. Facebook's decision to end access to the Friends'hotos Endpoint does not

7 enhance user privacy because the App could only sort through photos that had already been

8 shared with the App user and the App user and the user's friends had full control over which, if

9 any, developers were permitted to access their photos.

10 116. Instead, by ending Developer access to the Friends'hotos Endpoint, Facebook

has monopolized for itselfthe ability to create applications capable ofsearching or sorting photos,

12 which harms consumers, Developers, and competitors.

13 117. No countervailing benefits to competition or consumers stemming from

14 Facebook's representations and conduct exist.

15 118. The harm to 643 and other Developers by Facebook's representations and conduct

16 outweighs the reasons, justifications, or motives for the representations and conduct by Facebook.

17 119. 643 could not have reasonably avoided its injury because Facebook only

18 announced its decision to terminate access to the Friends'hotos Endpoint after 643 had made

19 considerable investment and Facebook had approved the App.

20 120. 643 also requested that Facebook not end access to Friends'hotos Endpoint, but

21 Facebook did not change its decision.

22 121. Facebook's actions thus constituted an unfair business practice under California's

23 Unfair Business Practices Act.

24 122. Facebook's decision to end access to the Friends'hotos Endpoint was also

25 unlawful.

26 123. In taking the actions alleged herein, Facebook acted with fraud, malice and

27 oppression, and in reckless disregard ofthe rights of 643.

28

Case No. CIV 533328

31

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 32 of 46
1 124. 643 suffered substantial injury as a result of Facebook's actions, including the loss

2 ofits investinent in developing the App and lost revenue.

3 125. Accordingly, Facebook is liable to 643 for violation ofCalifornia's Unfair

4 Business Practices Act.

5 126. As a proximate result ofthe acts and conduct of Facebook herein alleged, 643 has

6 found it necessary to engage attorneys, and incur attorney's fees, and willcontinue to incur

7 attorney's fees, in an unascertained ainount to be established according to prooffollowingthe

8 conclusion oftrial.

10

12

13

14

15

16

17

18

20

21

22

23

24

25

26

27

herein.

COUNT II: PROMlSSORY ESTOPPEL,

[Against all Defendants]

127.. 643 re-alleges and repleads paragraphs 1 through 126 as though set forth fully

128. Facebook clearly and unambiguously promised that:

a. Developers would be able to integrate their applications into Faccbook's social

graph;

b. Developers would have the same access to integration oftheir applications as

Facebook;

c. Developers could easily access Graph API objects;

d. Facebook would suppoit Developers in achieving mass distribution ofDeveloper

applications;

e. Facebook would provide adequate tools for developers to build their applications;

f. Developers would be able to build a business on Facebook Platform;

g. Developers would be able to monetize their applications on Facebook by selling

ads on their application pages;

h. Developers would be able to build applications on a fair, level playing field;

i. Developer applications would not be "second class citizens" compared to

Facebook's own applications;

Case No. CIV 533328

32

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 33 of 46
j. Developer applications that compete with Facebook applications would be

welcome; and

k. As long as Developer applications abided by Facebook Terms of Service,

Facebook willbe neutral as to these applications.

5 129. 643 invested considerable capital, labor, time, and effort into developing the App

6 in reliance on these promises.

130. 643's reliance was reasonable because Facebook had consistently made these

8 representations for seven years without ever stating that it could prevent Developers from

9 building the specific kinds of applications Facebook was enticing them to build all along.

10 131. 643's reliance was foreseeable by Facebook.

132. 643 was injured as a result ofits reliance on Facebook's promises, which

12 Facebook did not keep, in an unascertained amount in excess of $ 25,000.00, to be established

13 according to proof at trial.

14 133. Accordingly, Facebook is liable to 643 for damages.

15

17

18

19

20

2]

22

23

24

25

26

27

herein.

.COUNT III:NEGLIGENT MISREPRESENTATION

[Against all Defendants]

134. 643 re-alleges and repleads paragraphs 1 through 133 as though set forth fully

135. Facebook represented that

a. Developers would be able to integrate their applications into Faccbook's social

graph;

b. Developers would have the same access to integration oftheir applications as

Fac cbook;

c. Developers could easily access Graph API objects;

d. Facebook would support Developers in achieving mass distribution ofDeveloper

applications;

e. Facebook would provide adequate tools for developers to build their applications;

f. Developers would be able to build a business on Facebook Platform;

Case No. CIV 533328

.33

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 34 of 46
1 g. Developers would be able to monetize their applications on Facebook by selling

ads on their application pages;

3 h. Developers would be able to build applications on a fair, level playing field;

i. Developer applications would not be "second class citizens" coinpared to

Facebook's own applications;

6 j. Developer applications that compete with Facebook applications would be

welcome; and

8 k. As long as Developer applications abided by Facebook Terms of Service,

Facebook willbe neutral as to these applications.

10 136. Such representations were untrue, because Facebook later claimed that it had

retained for itselfthe right to terminate the Friends'hotos Endpoint, and did close the Friends'2

Photos Endpoint to Developers, while Facebook kept for itselfthe ability to develop applications

13 that access photos.

14 137. Regardless ofits actual belief, Facebook must have made those representations

15 without any reasonable ground for believing the representations to be true.

16 138. Facebook conveyed the representations in a commercial setting for a business

17 purpose, namely inducing Developers to develop applications for Facebook.

18 '39. Facebook made those representations with the intent to induce Developers,

19 including 643, to develop applications, including the App, that used the Friends'hotos endpoint,

20 thereby adding features to Facebook, enhancing Facebook's functionality and user experience,

21 and generating more revenue for Facebook.

22 140. 643 was not aware that Facebook's representations were false, and 643 developed

23 the App in reliance on the truth ofFacebook's representations.

24 141. 643's reliance on the truth of Facebook's representations was justified because

25 Facebook had consistently made these representations for seven years without ever stating that it

26 could prevent Developers from building the specific kinds of applications Facebook was enticing

27 them to build all along.

28

Case No. CIV 533328

34

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 35 of 46
142. 643 was injured as a result ofits reliance on Facebook's representations, in an

2 unascertained amount in excess of $ 25,000.00, to be established according to proof at trial.

143. In taking the actions alleged herein, Facebook acted with fraud, malice and

4 oppression, and in reckless disregard ofthe rights of 643

144. Accordingly, Facebook is liable to 643 for damages.

COUNT IV:INTENTIONAL'INTE<RF<ERKNCE.WITHCONTRACT.,

[Against all Defendants]

145. 643 re-alleges and repleads paragraphs 1 through 144 as though set forth fully

herein.

146. 643 had entered into license agreements and subscriptions for premium access

10

with its users.

11

147. Facebook knew ofthese license agreements and subscriptions.

12

148. Facebook intentionally interfered with and disrupted these contracts when it stated

that it would end 643's access to the Friends'hotos Endpoint on April 30, 2015, despite

knowing that interference with these contracts would be certain or substantially certain to occur

as a result ofFacebook's act in ending 643's access.

16

149. Facebook further intentionally interfered with and disrupted 643's contracts with

17

18

its users when it did terminate 643's access to the Friends'hotos Endpoint on A '1 pll 30 2015

despite knowing that interference with these contracts would be certain or substantially certain to

occur as a result ofFacebook's act in ending 643's access.

20

21

150. 643's contract with its,users was thereby disrupted by Facebook.

151. As a result, 643 has suffered and willsuffer damage in an unascertained amount in

23

excess of $ 25,000.00 to be established according to proof at trial.

24

152. In taking the actions alleged herein, Facebook acted with fraud malice and

oppression, and in reckless disregard ofthe rights of 643.

25

26

153. Accordingly, Facebook is liable to 643 for damages.

27

28

Case No. CIV 533328

35

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 36 of 46
4 herein.

COUNT V: INTENTIONALINTERFERKNCKWITIX

PROSPECTIVE BUSINESS RELATIONS

[Against all Defendants]

154. 643 re-alleges and repleads paragraphs 1 through 153 as though sct forth fully

5 155. 643 had an expectation of economic benefit from third parties, including its users

6 who downloaded the App and other Facebook users who may have downloaded the App if643

7 had marketed the App as it planned.

156. Facebook knew of 643's relationship with the users ofthe App, and knew of 643's

9 plans to market the App.

10 157. Facebook intentionally disrupted these relationships when it announced that it

11 would end 643's access to the Friends'hotos Endpoint on April 30, 2015, despite knowing that

12 interference with these relationships would be certain or substantially certain to occur as a result

13 ofFacebook's act in ending 643's access.

18 159. 643's relationship with its users was thereby disrupted, and willbe further

1 9 disrupted.

20 160. As a result, 643 suffered dainage in an unascertained amount in excess of

21 $25,000.00 to be established according to proof at trial.

161. In taking the actions alleged herein, Facebook acted with fraud, malice and

23 oppression, and in reckless disregard ofthe rights of 643.

14 158. Facebook further intentionally interfered with and disrupted 643's relationships

15 with its users when it did terminate 643's access to the Friends'hotos Endpoint on April 30

16 2015, despite knowing that interference with these relationships would be certain or substantially

17 certain to occur as a result ofFacebook's act in ending 643's access.

24

25

26

162. Accordingly, Facebook is liable to 643 for damages.

JURY.TRIALDEMAND.

163. 643 demands a trial by jury on all claims so triable,

27

28

Case No. CIV 533328

36

Plaintiffs Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 37 of 46
PRAYER FOR RELIEF

WHEREFORE, Plaintiff643 asks this Court to enter judgment against Defendant

3 Facebook, Inc., as follows:

4 A. Ajudgment or order declaring Facebook's conduct, as alleged, unlawful under

5 California's Unfair Business Practices Act;

6 B. Ajudgment, order, or award of damages adequate to compensate 643;

7 C. A permanent injunction prohibiting Facebook from removing Developer access to

8 the Friends'ser Photos Endpoint;

9 D. A permanent injunction prohibiting Facebook from interfering with 643's

10 contracts or prospective business relations;

11 E. An award ofits reasonable attorneys'ees and costs;

12 F. Punitive damages and/or treble damages as provided by California's Unfair

13 Business Practices Act; and

14 G. Such other further relief as this Coute or a jury may deem proper and just.

15

16,Dated: February 26, 2016

17

CRITERION LAW

BIRNBAUM&GODKIN, LLP

18

19

20

21

22

Basil P. Fthm<6; Esq.':

David S. Godkin (admitted pro hac vice)

Andrew A. Caffrey, III(admitted pro hac vice)

Attorneys for Plaintiff

Six4Three, LLC

23

24

25

26

27

28

Case No. CIV 533328

37

Plaintiff's Second Amended Complaint for Injunction and Damages

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 38 of 46
Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 39 of 46
EXHIBIT EXHIBIT 1

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 40 of 46
f8 Event and Facebook 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

Plafform.

What is a "hackathon"?

A hackathon is an all-night coding event during which Facebook engineers work on any project that interests

them. Facebook uses the word "hackathon" to refer to a gathering of engineers, who possess technical expertise

and collaborate 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 Facebook. It is the network of connections and relationships between people on

Facebook 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 Plafform to access information from the social graph, offering users an

experience that's relevant to them. Facebook applications can plug into the Facebook website in a number of

ways: applications can be embedded on users'rofile pages, reside on their own separate pages (called "canvas"

pages), or live through desktop applications using data from the Facebook social graph.

What's new in Facebook Platform?

We'e 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 can

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 Facebook 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 Facebook Platform?

The kinds of applications developers can build on Facebook Platform are limited only by their imaginations.

Because applications are based on the Facebook social graph they can be more relevant to users, keeping

people in touch with what and whom they care about. We'e already seen a variety of applications built by our

developer partners, including those for sharing media files, book reviews, slideshows and more. Some of the

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Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 41 of 46
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possibilities of Facebook applications are illustrated in the Facebook Platform Application Directory, available at

http://www.facebook.corn/apps.

Are there any restrictions on what developers can build?

Developers are encouraged to exercise their creativity when building applications. Of course, all applications are

subject to the Terms of Service 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

that phishes or spams users. And users will always have the power to report any applications that compromise

Facebook's trusted environment, keeping our users'nformation 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?

lf a user sees an application she likes on a friend'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" in 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 Facebook.

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 specific applications. With Facebook Platform, we'e offering additional privacy controls and

requiring that third parties treat user information with the same respect we do—and our users have come to

expect. Users can also choose to completely opt out of making their data available through Facebook Platform.

Applications can never violate users'asic 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 built by third parties are required to respect Facebook users'rivacy preferences. Third-party

applications allow users and their friends to share information in new ways, without affecting the security and

privacy that they'e always enjoyed on Facebook.

How many applications are there for Facebook Platform?

At f8, we are launching with over 85 applications from more than 65 developer partners, and that's only the

beginning. We'e encouraging 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 integrated into the site and take advantage of the network of real connections

through 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 willFacebook maintain its minimalist style if users can add and move applications around on their

profile?

We'e giving our users the choice to add applications and control their placement in their profiles, but we'e 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 not 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

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 42 of 46
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 willFacebook deal with applications that compete with one another or even compete with Facebookbuilt applications?

We welcome developers with competing applications, including developers whose applications might compete

with Facebook-built applications. Many applications are likely to offer similar features. We'e designed Facebook

Plafform 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 willFacebook monetize Facebook Platform?

Allthe great applications built by our developer partners provide a service to our users and strengthen the social

graph. The result 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'e giving developers the

freedom to monetize their applications as they like. Developers can include advertising on their

applications'anvas

pages, though no advertising will be allowed within the application boxes that appear within user profiles.

Are you going to share revenue with developers?

While revenue sharing is not available at launch, we are looking into ways to share advertising revenue with

developers. This version of 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 Facebook Query Language (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 Plafform, check out the Facebook Developer site at

http://developers.facebook.corn.

111

156 University Avenue ~ Palo Alto, CA 94301 ~ T: 650-543-4800 ~ F: 650-543-4801

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 43 of 46
Attotney ot'at ty without Attorney:

ALANH. PACKER, SBN 124724

NEWMEYER &, DILLIONLLP

1333 N. CALIFORNIABLVD.

SUITE 600

WALNUTCREEK, CA 94596

Telephone No: 925-988-3200 FAXNot 925-988-3290

Ref. No. or File No

Attorneyfor: Plaintiff

Insert name ofCourt, and Judicia!Disttict and Branch Court:

Superior Court OfThe State OfCalifornia - Countv Of San Mateo

Plaintiff: BUTLERREALTY,LLC

Defendant: CALIFORNIACAPITALINSURANCE COMPANY

PROOF OF SERVICE Hean'ng Date: Time:

SUMMONS

I. At the time ofsetvice Iwas at least 18 years ofage and»ot a party to this action.

Fot Cortrt Use Only

Flt Em)

SAN Lti 'tTEO COUNTY

FEB 2 6 2016

Qr QQQft lt

Dept/Dint Case Nutnbet:

CIV536982

2. I served copies ofthe SUMMONS; CIVILCASE COVER SHEET; COMPLAINT;ADR INFORMATIONPACKET; NOTICE OF

CASE MANAGEMENTCONFERENCE

3. a. Party served:

b. Person setved:

CALIFORNIACAPITALINSURANCE COMPANYDAVISTINDALL,AGENT FOR SERVICE OF PROCESS

MICHAELJOHNSON, CONTROLLER. AUTI-IORIZEDTO ACCEPT SERVICE

OF PROCESS.

4. Address whet e the party was served 2300 GARDEN ROAD

MONTEREY, CA 93940

5. Ise>ved the party:

a. by personal service. I personally delivered the documents listed in item 2 io the party or person authorized to receive

process for the party (1) on: Thu., Jan. 21, 2016 (2) at: 9:22AM

6. The "Notice to the Person Setved" (on the Summons) was completed as follows:

on behalf of: CALIFORNIACAPITALINSURANCE COMPANY

Under CCP 416.10 (corporation)

7. Person FVlro Served Papers:

a. HECTOR GARCIA

1511 West Beverly Blvd.

, ~01'I, Les Angeles, CA90026

~

~

Telephone (213) 250-9111

I I u:,I ~1

)

Fax (213) 250-1197

www.firstlegalnetwork.corn

Recoverable Cost Pcr CCP 1033.5(a)(4)(B)

d. The Fee for Setvice wast

e. I am: (3) registered California process server

(i) Independent Contractor

(ii) Registration No.: 100

(iii) County: Monterey

8. Ideclare under penalty ofperjury under the laws ofthe State ofCa 'ia that the 'cgoing is true and correct.

Date: Fri, Jan. 22, 2016

Judicial Council Form POS-010

Rule 2.150.(a)em(b) Rev January 1, 2007

PROOF F SERVICE

SU MONS %3N7I »di f7690N.

C1

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 44 of 46
PH fAGGO

SUMMONS

(CITACIONJUQICIAL)

NOTICE TO DEFENDANT:

(AVISOALDEINANDADO):

ELIZABETHM.B. KARNAZES,EDWARDL. NOVAK,LAURAJ.

WONS, and DOES 2 to 20, inclusive

YOU ARE BEING SUED BY PLAINTIFF:

(LO ES TA DENANDANDOEL DENANDANTE):

JOHN E. FERRY and KIRSTEN FERRY

SUIN-100

FOR COURT USE ONLY

(SOLO PARA USO OE iACORTE)

p-:-; gg

pe l', r,„',; tt -t 4 QQUNYY

FFg g

IS /III1II-

—.hoes e

hi Qr '

, Deputy

Pv I (Adjunto)

NOTICEI You have been sued. The court may decide against you without your being heard unless you respond within 30 days. Read the information

below.

You have 30 CALENDAR DAYS after this summons and legal papers are served on you to file a written response at this court and have a copy

served on the plaintiff. A letter or phone call will not protect you. Your written response must be in proper legal form ifyou want the court to hear your

case. There may be a court form that you can use for your response. You can find these court forms and more information at the California Courts

Online Self-Help Center (

/yM/t/t/courtinfo.ca.govisellhelp), your county law library, or the courthouse nearest you. Ifyou cannot pay the filing fee, ask

the court clerk for a fee waiver form. Ifyou do not file your response on time, you may lose the case by default, and your wages, money, and property

may be taken without further warning from the court.

There are other legal requirements. You may want to call an attorney right away. Ifyou do not know an attorney, you may want to call an attorney

referral service. Ifyou cannot afford an attorney, you may be eligible for free legal services from a nonprofit legal services program. You can locate

these nonprofit groups at the California Legal Services Web site (wl/wtt/1aM/helpcalifomia.org), the California Courts Online Self-Help Center

(wh/r/h/r/courtinfo.ca.govlselfhelp), or by contacting your local court or county bar association. NOTE: The court has a statutory lien for waived fees and

costs on any settlement or arbitration award of $ 10,000 or more in a civil case. The court's lien must be paid before the court willdismiss the case.

.(. i iauleni Lo hen demandado Sino.msponde dentm de 30 diesis con,e puede decidir en su contra sin escucharsu uersidn Lea ia in.ihrmacian a

continuacidn.

Tiene 30 DlAS DE CALENDARIOdespurss de que ie entreguen esta citacidn ypapeies iegaies para presentar Una iespuesta por escrito en esta

corte y hacer que se entfegue una copia ai demandante. Una carta o una iiamada telefdnica no io protegen. Su respuesta por escrito tiene que ester

en formato legal correcto si desea que procesen su caso en ia corte. Es posibie que haya Un fonnuiario que usted pueda Usar para su respuesta.

Puede encontrar estos formuiarios de ia corte y masinformacidn en ei Centro de Ayuda de ias Cortes de California (www.sucorte.ca.gov), en ia

biblioteca de leyes de su condado o en ia corte que ie quede as ceica. Si no puede pagar ia cuota de presentacidn, pida ai secretario de la corte

que le dfs un formuiario de exencidn de pago de cuotas. Si no presenta su respuesta a tiempo, puede perder ei caso porincumpiimiento y la corte le

poCha quitar su sueido, dinero y bienes sin as adveffenc/a.

Hay otros requisitos iegaies. Es recomendabie que liame a un abogadoinmediatamente. Si no conoce a un abogado, puede iiamar a Un servicio de

remisidn a abogados. Si no puede pager a un abogado, es posibie que cumpia con los requisitos para oblener servicios iegaies gratuitos de un

programa de servicios legaies sin fines de lucio. Puede encontfar estos grupos sin fines de lucio en ei sitio web de California Legal Services,

(www.lawhelpcalifornia.org), en ei Centro de Ayuda de ias Cortes de California, (www.sucorte.ca.gov) o ponitsndose en contacto con ia corte o ei

coiegio de abogados locales. AVISO: Por ley, la corte tiene derecho a reciamar las cuotas y los costos exentos porimponer Un gravamen sobre

cuaiquier recuperacidn de $10,000 cS as de valor recibida mediante Un acuerdo o Una concesidn de arbitraje en Un caso de de/echo civil. Tiene que

pagar ei gravamen de la corte antes de que la corte pueda desechar ei caso.

The name and address of the court is:

(El nombre y direcci6n de la corte es): San Mateo Superior Court

400 County Center CIV535965

Redwood City, CA 94063

The name, address, and telephone number of plaintifPS attorney, or plaintiffwithout an attorney, is:

(El nombre, la direcci6n y el nf'Jmero de teldfono del abogado del demandante, o del demandante que no tiene abogado, es):

John E. Ferry,ahtd JLhsatcatt/eny / P.O. Box 55621, Hayward CA 94545 / l650) 422~

(Fecha) iSecretario)

(For proof ofservice ofthis summons, use Proof of Service of Summons (form POS-010).)

(Para prueba de entrega de esta citati6n use el formuiario Proof of Service of Summons, (POSNOTICE TO THE PERSON SERVED: You are served

1. ~ as an individual defendant.

2. ~ as the person sued under the fictitious name of (specify):

ea "a

4!'==-'.=-'= ~g, 3.

~ on behalf of (specify):

under: ~ CCP 416.10 (corporation) CCP 416.60 (minor)

d y

s

CCP 416.20 (defunct corporation) ~ CCP 416.70 (conservatee)

CCP 416 40 (association or partnership) ~ CCP 416.90 (authorized person)

4. ~

by personal delivery on (date):

Form Adopted for Mandatory Use

Judkchat Council of Califomha

SUM-100 IRev. July 1, 200th)

ANSH06.g SUMMONS

Parte 1 of 1

Code of CNhl Procedure SS 41 2 20, 465

wrvhv.courtinfo.ca.gov

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 45 of 46
I

1

Case 3:17-cv-00359-WHA Document 1-2 Filed 01/24/17 Page 46 of 46