Meta’s leaders settle a $8 billion privacy lawsuit just before they go on trial
Zuckerberg, Sandberg, Andreessen, and others agree to pay $8 billion to resolve a historic shareholder lawsuit regarding Facebook’s data policies, halting the trial.
A lawyer for the plaintiffs told a Delaware judge on Thursday that Mark Zuckerberg and other current and former directors and officials of Meta Platforms have reached an agreement to resolve a historic shareholder case that accused them of permitting persistent privacy abuses of Facebook users.
The agreement, which intends to settle claims for up to $8 billion in damages, was made just before the Delaware Court of Chancery’s well-known trial was about to begin its second day.
The shareholder’s attorney, Sam Closic, told Chancellor Kathaleen McCormick of the last-minute resolution, saying, “This agreement just came together quickly.”
The trial, which was scheduled to continue until the end of the following week and feature testimony from some of Silicon Valley’s most well-known individuals, was postponed after McCormick congratulated both sides.
The settlement’s specifics are still under wraps, and neither Meta nor the defense attorneys offered any commentary on the decision. The case did not include Meta as a defendant.
The case was brought by shareholders against eight additional current and former executives, former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, and Meta CEO Mark Zuckerberg. After years of claimed privacy violations, the plaintiffs sought to hold the 11 defendants personally accountable for billions of dollars in legal fees and regulatory fines that the corporation had to pay.
The US Federal Trade Commission (FTC) fined Facebook $5 billion in 2019 after regulators found that the company had breached a 2012 consent decree that required it to protect users’ personal information. This was one of the most severe penalties. The penalty came after the Cambridge Analytica incident, in which millions of Facebook users’ personal data was collected without their knowledge and used to sway political campaigns.
The shareholders accused Zuckerberg and other Meta executives of knowingly facilitating what they called a “illegal data harvesting operation” and “completely failing to oversee” adherence to the 2012 FTC agreement. They demanded that the defendants use their own money to pay Meta back. The executives in question refuted the allegations, describing them as “extreme.”
Sandberg was scheduled to testify on Wednesday after Zuckerberg on Monday. Before the case was unexpectedly stopped, Andreessen, another defendant, was set to testify on Thursday.
Other well-known people were also drawn to the case. Reed Hastings, a former board member of Meta and co-founder of Netflix, and Peter Thiel, a billionaire who was an early Facebook investor and co-founder of Palantir Technologies, were anticipated to testify.
Jeffrey Zients, the current White House Chief of Staff and a former board member of Meta, testified on Wednesday that the firm did not accept the FTC punishment to absolve Zuckerberg of responsibility, as the plaintiffs had alleged. An expert witness for the plaintiffs also criticized Facebook’s privacy framework on Wednesday, highlighting “gaps and weaknesses,” although he refrained from admitting that the business had violated the 2012 agreement.
The settlement may have spared Zuckerberg and other officials from a public reckoning, which disappointed critics outside the courtroom.
According to Jason Kint, CEO of Digital Content Next, a trade association for digital publishers, “this settlement may provide relief to the parties involved, but it’s a missed opportunity for public accountability.”
“Instead of its entire business model of surveillance capitalism and the reciprocal, unrestricted sharing of personal data collapsing, Facebook has successfully reframed the ‘Cambridge Analytica’ scandal about a few bad actors,” Kint continued. “There is still no resolution to that reckoning.”
Seldom has Zuckerberg given an in-court testimony. Before he could testify, a 2017 lawsuit filed by shareholders against his plan to establish a special class of stock was also resolved.
According to its website, Meta, which changed its name from Facebook in 2021, has spent billions of dollars enhancing privacy safeguards since the FTC fine in 2019.
