Meta and Zuckerberg Settle $8 Billion Lawsuit Over Privacy Concerns in Historic Trial Resolution
In a development announced on Thursday, Mark Zuckerberg and various current and former directors and officers of Meta Platforms have reached a settlement to resolve claims seeking $8 billion in damages for alleged privacy violations. The terms of the settlement remain confidential, as no details were disclosed during the court hearing presided over by Judge Kathaleen McCormick of the Delaware Court of Chancery.
The trial, which was set to enter its second day, was adjourned following the announcement, with Judge McCormick expressing her congratulations to the parties involved. Plaintiff’s attorney Sam Closic noted that the agreement came together swiftly, and billionaire venture capitalist Marc Andreessen, a defendant in the trial and Meta director, who was scheduled to testify on Thursday, was not required to do so as a result of the settlement.
Shareholders of Meta initiated legal action against Zuckerberg, Andreessen, and other former company officials, including former Chief Operating Officer Sheryl Sandberg, aiming to hold them accountable for billions of dollars in fines and legal costs that the company has incurred over recent years due to privacy violations.
The Federal Trade Commission (FTC) imposed a $5 billion fine on Facebook (now Meta) in 2019, following findings that the company failed to comply with a 2012 agreement with the regulator regarding user data protection. The shareholders sought to compel the defendants to use their personal wealth to reimburse the company for these costs. The defendants disputed the allegations, characterizing them as “extreme claims.”
Meta changed its name from Facebook in 2021, and the company itself was not a defendant in this case. Meta declined to comment on the settlement, while a lawyer representing the defendants did not respond to a request for comment at the time of publication.
Some observers have expressed disappointment that the settlement may forego public accountability, with Jason Kint, head of Digital Content Next, a trade group for content providers, stating, “This settlement may bring relief to the parties involved, but it’s a missed opportunity for public accountability.”
Zuckerberg and Sandberg were anticipated to take the stand next week, with the trial scheduled to run through the end of the following week. The case was also expected to feature testimony from former Facebook board members Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix.
The lawsuit alleged that former and current board members failed to oversee the company’s compliance with the 2012 FTC agreement, and accused Zuckerberg and Sandberg of knowingly operating Facebook as an illegal data harvesting operation. The case stemmed from revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm that worked for Donald Trump’s successful US presidential campaign in 2016, leading to the record-setting FTC fine at the time.
In a related development, an expert witness for the plaintiffs testified on Wednesday about what he described as “gaps and weaknesses” in Facebook’s privacy policies, without stating definitively whether the company violated the 2012 agreement with the FTC. Former board member Jeffrey Zients testified that the company did not agree to the FTC fine to spare Zuckerberg legal liability, contradicting shareholder claims.
On its website, Meta has stated that it has invested billions of dollars in protecting user privacy since 2019. The trial would have provided a rare opportunity for Meta investors to witness Zuckerberg testify under oath regarding the company’s privacy practices, following his earlier avoidance of such a scenario during another trial involving a lawsuit by company investors over his plan to issue special class Facebook stock in 2017, which settled prior to his testimony.
In summary, Meta Platforms and its directors have reached a confidential settlement to resolve claims related to alleged privacy violations worth $8 billion. The trial was adjourned following the announcement of the settlement, with no details disclosed at this time. Observers have expressed concerns that the settlement may prevent public accountability regarding these matters.
