Shareholders say Facebook officials repeatedly and continually violated a 2012 consent order with the Federal Trade Commission under which Facebook agreed to stop collecting and sharing personal data on platform users and friends without their consent
Mark Zuckerberg
A USD 8 billion class action investors' lawsuit against Meta CEO Mark Zuckerberg and company leaders ' current and former ' begins Wednesday, with claims stemming from the 2018 privacy scandal involving the Cambridge Analytica political consulting firm. Investors allege in their lawsuit that Meta did not fully disclose the risks that Facebook users' personal information would be misused by Cambridge Analytica, a firm that supported Donald Trump's successful Republican presidential campaign in 2016.
Shareholders say Facebook officials repeatedly and continually violated a 2012 consent order with the Federal Trade Commission under which Facebook agreed to stop collecting and sharing personal data on platform users and friends without their consent. Facebook later sold user data to commercial partners in direct violation of the consent order and removed disclosures from privacy settings that were required under consent order, the lawsuit alleges.
The fallout led to Facebook agreeing to pay a USD 5.1 billion penalty to settle FTC charges. The social media giant also faced significant fines in Europe and reached a USD 725 million privacy settlement with users. Now shareholders want Zuckerberg and others to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than USD 8 billion.
The first trial witness, privacy expert Neil Richards, testified Monday morning for the shareholders. 'Facebook's privacy disclosures were misleading,' said Richards, a professor at Washington University Law School. On cross-examination by a lawyer for the board of directors, he said he could not say whether the company had violated a 2012 consent order with the FTC. However, when asked about a PricewaterhouseCoopers report published in 2015 that found Facebook's privacy controls to be sufficient, Richards called such reviews 'of limited value' because they are based on information provided by the firm itself.
The eight-day case will feature testimony from Zuckerberg and former Chief Operating Officer Sheryl Sandberg. Others expected to appear on the stand include board member Marc Andreessen and former board member Peter Thiel. It takes place in Delaware Chancery Court, where Facebook parent Meta Platforms Inc. is incorporated. A judge is expected to rule in the months after the trial wraps up.
Meta took the case all the way to the Supreme Court to try to get it dismissed. Justices heard arguments in November and decided that it was wrong to take up the case in the first place. The high court dismissed the company's appeal, leaving in place an appellate ruling allowing the case to go forward.
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