Meta and Zuckerberg Settle $8B Facebook Privacy Case

On Thursday, Mark Zuckerberg and current and former executives of Meta Platforms reached an agreement to settle claims alleging $8 billion in damages for privacy violations on Facebook. This was revealed by a lawyer representing the shareholders to a Delaware judge.

The specifics of the settlement were kept confidential, and the defense attorneys refrained from addressing Judge Kathaleen McCormick of the Delaware Court of Chancery. McCormick paused the trial just as it was set to begin its second day and offered her congratulations to both parties.

Sam Closic, the plaintiffs’ attorney, mentioned that the resolution was expedited.

Marc Andreessen, a billionaire venture capitalist and current Meta director, was anticipated to testify on Thursday.

The lawsuit, filed by Meta shareholders against Zuckerberg, Andreessen, and other former officials, including ex-COO Sheryl Sandberg, aimed to hold them accountable for billions in fines and legal fees incurred by the company over recent years.

In 2019, the Federal Trade Commission penalized Facebook with a $5 billion fine after concluding that the company had not abided by a 2012 agreement focused on user data protection.

The shareholders sought reimbursement from the 11 defendants, aiming for them to draw from their personal assets. The defendants denied these accusations, labeling them as “exaggerated claims.”

In 2021, Facebook rebranded itself as Meta. The company itself was not a defendant in this case.

The company declined to provide any comments. An attorney representing the defendants did not respond promptly to a request for a statement.

Jason Kint, CEO of Digital Content Next—a trade organization for content providers—remarked that while the settlement might bring some relief, it also represents a lost chance for public accountability.

Zuckerberg was scheduled to take the stand the following Monday, with Sandberg set to testify on Wednesday. The trial was expected to continue into the next week.

Additionally, former Facebook board members Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix, were also expected to testify.

In their lawsuit, Meta investors argued that the current and former board members failed to sufficiently oversee the company’s adherence to the 2012 FTC agreement and accused Zuckerberg and Sandberg of operating Facebook as an illicit data collection entity.

This case arose following the disclosures that data from millions of Facebook users was utilized by Cambridge Analytica, a now-defunct political consulting firm that was involved in Donald Trump’s successful U.S. presidential campaign in 2016. These revelations resulted in the record-setting FTC fine.

On Wednesday, a plaintiff’s expert testified about the so-called “gaps and weaknesses” in Facebook’s privacy policies but refrained from confirming if the company had violated the 2012 FTC agreement.

Jeffrey Zients, a former board member, testified that the company did not agree to the FTC fine to protect Zuckerberg from legal liability, as shareholders have alleged.

The company has stated on its website that it has invested billions in user privacy protections since 2019.

This trial presented a rare opportunity for Meta investors to witness Zuckerberg answer difficult questions under oath.

Back in 2017, Zuckerberg was expected to testify in a case involving a lawsuit from company investors opposing his proposal to introduce a special class of stocks that would further extend his control over Facebook. That case was settled before he had to take the stand.

Kint noted that “Facebook has managed to reshape the narrative surrounding the ‘Cambridge Analytica’ scandal, framing it as an issue with a few bad actors rather than a fundamental flaw within its entire business model of surveillance capitalism and the unrestricted sharing of personal data.” He added that this oversight now remains unaddressed.