Snapchat maker unseals former employee's lawsuit: 'Snap has nothing to hide'

Saying it had “nothing to hide,” the company behind Snapchat released an unredacted version of a lawsuit filed against it by a former employee that claims investors and advertisers were misled about usage data.

Snap Inc. offered a blanket denial of the allegations in the lawsuit, brought in January by former employee Anthony Pompliano.

Pompliano had redacted portions of the lawsuit that may have constituted Snap trade secrets, but he asked a judge last week to unseal it because of the public interest in the claims. The Venice technology company complied before the court could rule, noting that as a publicly traded company since last month, some of its usage data is no longer private.

Among the claims Pompliano makes is that Snap executives told unnamed people outside the company that 100 million people used its app each day. But at the time, Snap's internal measurement tool showed just 95 million users, and an external program counted 97 million.

In denying the claim, Snap’s attorneys added Monday that the alleged “minor metrics deviation hardly measures up to Pompliano's gasping rhetoric about Snap being built ‘on a house of cards.’”

The company now only uses the internal tool, dubbed Blizzard, to report usage statistics, according to the lawsuit and regulatory filings.

Snap did not go into specific detail about why it disputes other newly public passages containing Pompliano’s allegations. Those include:

  • Snap chief strategy officer Imran Khan asked Pompliano to draw a detailed organizational chart of the workforce at Facebook, where Pompliano had worked before joining Snap. Pompliano says he refused, according to the lawsuit.
  • Snap executives described the user growth rate to Pompliano as being in the double digits, when it was actually about 1% to 4%.
  • Snap executives told unspecified individuals outside the company that 87% of users completed the app’s registration process and that 40% of users kept using the app after a week. Pompliano says the figures were actually about 40% and about 20%, respectively.
  • Chief Executive Evan Spiegel dismissed concerns about the inaccurate data as “no big deal” during a presentation by Pompliano.

Pompliano worked at Snap for three weeks in 2015 before being fired. He’s seeking a court order to bar Snap from misrepresenting the reasons for his firing when the company is called on by any of his prospective employers. He alleges Snap labels him as incompetent, when in his view Spiegel wanted him fired for internally raising concerns about the usage measurements.

Pompliano’s move to go public with a dispute contractually bound to take place secretly in arbitration “is just one big publicity stunt for him,” the company’s attorneys reiterated in the Monday filing.

John Pierce, Pompliano’s attorney, said he was encouraged that Snap “has come to its senses and belatedly agreed with us that the complaint in this case belongs in the public eye.”

Pierce continued in a statement, “By the end of this litigation — and rest assured this is only the beginning — we will prove that every claim Pompliano has made about the long history of misconduct, going to the heart of the astronomical valuation of this now public company, is true.”

DOCUMENT: Read the full complaint in Pompliano v. Snap »

DOCUMENT: Read Snap’s reply in the case »

DOCUMENT: Read Pompliano’s lawsuit against Brighten Labs »

DOCUMENT: Read Pompliano’s motion to unseal court documents »

DOCUMENT: Read Snap’s reply and unsealed lawsuit »

paresh.dave@latimes.com / PGP

Twitter: @peard33

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UPDATES:

12:55 p.m.: This article was updated with a comment from John Pierce, an attorney for Anthony Pompliano.

This article was originally published at 9:40 a.m.

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