b'click injection scheme rendered several statements bySecond, the court held that plaintiffs fail[ed] entirely the company misleading, including (1) Cheetahs publicto plead scienter. The court held that plaintiffs heavy statements regarding the popularity and functionality of itsreliance on circumstantial evidence was insufficient, and applications generally, (2) statements regarding Cheetahs[e]ven taken together and construed in the light most revenue and sources and drivers of revenue, and (3) thefavorable to Plaintiffs, [their allegations] do not establish companys risk disclosures.that it is at least as likely that Defendants acted with Defendants moved to dismiss the amended complaint,scienter as that they did not. The court explained that a which the court granted with prejudice. First, the courtdefendants position does not, without more, support a concluded that none of the disclosures challenged byconclusion that the defendant had access to information Plaintiffs were rendered false or misleading by virtue ofcontradicting an alleged misrepresentation. Also plaintiffs Defendants failure to admit that they had engaged infailed to specifically identify any reports or statements the alleged click injection scheme. The court observedcontaining contradictory information, and the confidential that many of the statements alleged by plaintiffs towitness statements did not show that the defendants be misleading were about general topics concerningknew the challenged statements were false. Additionally, Cheetahs apps that were completely unrelated to anythe court rejected the core operations doctrine, noting scheme to garner referral bonuses from advertisers, suchthat it is far from clear that the core operations doctrine as statements about the users experience, an appsremains valid in light of the PSLRA. Nonetheless, even popularity on Google Play, or similar topics. For example,assuming it is a valid means to plead scienter, the court one of the alleged misstatements indicated that Cheetahdetermined that the complaint failed to plead facts giving Mobile remained the third largest global publisher inrise to a strong inference that the companys executives Google Plays non-game category. Such statements, theshould have known about the alleged click injection court held, were not rendered misleading by the allegedscheme, by virtue of being accused of click fraud in omissions. The court explained that functions that theOctober 2017 (culminating in a different securities fraud apps perform for users are unaffected by silent signalslawsuit in November 2017), after all but a few of the intended to capture referral bonuses. The court alsochallenged statements were made. The court held that rejected plaintiffs claims that revenue-related statementsthe mere fact that Cheetah Mobile had been suedwere misleading for fail[ing] to reveal that Cheetah hadwhich is all that Plaintiffs allegedoes not establish that earned revenue from fraudulent techniques, reasoningDefendants knew or should have known about the click that the revenue-related statements at issue were limitedinjection scheme at issue here.to true statistical facts. The court highlighted the fact that the disclosures at issue did not, explicitly or implicitly, ruleIn re AT&T/DirecTV Now Securities Litigation, out other factors playing a role in generating revenue.Case No. 19-CV-2892, 2020 WL 4909718 To the contrary, by using words such as primarily and(S.D.N.Y. Aug. 18, 2020); Hoffman v. AT&T most significant, Defendants overtly acknowledged that other factors might play a role. And plaintiffs did notIncorporated, Case No. 650797/2019, 126 allege the significance of the click and injection schemeN.Y.S. 3d 854 (N.Y. Sup. Ct. 2020) to Cheetahs overall revenues. As a result, the court heldUnderperformance Of New Productthat none of the statements at issue were the kind of half-truth necessary to state a securities law claim. TheAT&T is a global provider of telecommunications, media, court held that statements explaining drivers or revenuesand technology services. During the relevant time period, and profits from mobile apps, like Cheetah generate[d]its business was divided into four major segments: online marketing revenues primarily by referring userbusiness solutions, entertainment, consumer mobility, traffic and selling advertisements on our mobile and PCand international. In an effort to expand its entertainment platforms, came closer to the mark, but still were notsegment, AT&T acquired satellite-based TV provider, false or misleading because they expressly implied otherThe DirecTV Group, Inc. (DirecTV) even though sources of revenue. DirecTVs business was in decline as increasing numbers The court also rejected plaintiffs allegation that Cheetahsof subscribers transitioned from traditional television risk disclosures were misleading, noting cautionarysubscriptions to internet-based streaming services. On statements of potential risk have only rarely been foundOctober 22, 2016, AT&T announced that it entered into a to be actionable by themselves. The court furthermerger agreement with Time Warner, a media company explained that the possibility of Google Play terminating itswith a vast amount of video content and production relationship with Cheetah remained a hypothetical whencapacity. About a month later (and two-and-a-half months the challenged statements were made. The court alsobefore the scheduled Time Warner shareholders vote on noted that it was unclear whether plaintiffs were allegingthe deal), AT&T launched DirecTV Now (DTVN), a new that the risk disclosures themselves were actionable or ifstreaming product to help offset the loss of traditional they were merely arguing that they do not cure otherwisesatellite customers.misleading statements. 71'