Zuckerberg Faces $8 Billion Trial Over Alleged Facebook Privacy Lapses: A Look into Intense Scrutiny on Facebook’s Data Practices
In a landmark legal proceedings commencing on Wednesday, shareholders of Meta Platforms have initiated an $8 billion lawsuit against Mark Zuckerberg and various current and former company leaders, alleging that they unlawfully extracted user data in contravention of a 2012 agreement with the United States Federal Trade Commission (FTC).
Jeffrey Zients, the White House chief of staff under President Joe Biden and a Meta board member since May 2018, is anticipated to be among the initial witnesses to testify in this non-jury trial presided over by Kathaleen McCormick, Chief Judge of the Delaware Chancery Court.
The trial will feature testimony from Zuckerberg, other high-profile defendants including former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, and former board members Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix.
Lawyers representing the defendants, who have denied the allegations, declined to comment.
The case originated in 2018 following disclosures that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm associated with Donald Trump’s successful U.S. presidential campaign in 2016.
Following the Cambridge Analytica scandal, the FTC imposed a $5 billion fine on Facebook, asserting that the company had violated its 2012 agreement with the FTC aimed at safeguarding user data.
Shareholders are seeking reimbursement from the defendants for the FTC fine and associated legal expenses, estimated to exceed $8 billion by the plaintiffs.
In court filings, the defendants described the allegations as “extreme” and asserted that trial evidence would demonstrate Facebook’s engagement of an external consulting firm to ensure compliance with the FTC agreement, and that Facebook was a victim of Cambridge Analytica’s deceit.
Meta, not a defendant in this case, declined to comment. On its website, the company has stated it has invested billions of dollars into user privacy protection since 2019.
This lawsuit is regarded as the first of its kind to proceed to trial, alleging board members failed to fulfill their oversight duties—a claim often considered the most challenging to prove in Delaware corporate law. In a similar case involving Boeing’s current and former board members, a settlement for $237.5 million was reached in 2021, marking the largest ever in an alleged breach of oversight lawsuit. The Boeing directors did not admit to wrongdoing.
In addition to privacy-related claims at the heart of the Meta case, plaintiffs also allege that Zuckerberg foresaw the negative impact of the Cambridge Analytica scandal on Facebook’s stock and sold his shares, amassing at least $1 billion in profit.
Defendants contend that evidence will show Zuckerberg did not trade on inside information and utilized a stock-trading plan designed to remove his control over sales and prevent insider trading.
Judge McCormick is expected to rule on liability and damages following the conclusion of the trial.
