Mark Zuckerberg and several former Facebook directors have reached a last-minute settlement in an $8 billion lawsuit related to user privacy violations stemming from the Cambridge Analytica scandal. The settlement avoids a high-profile trial in Delaware where Zuckerberg and other tech billionaires were expected to testify.
The lawsuit, brought by Meta shareholders, sought to hold Zuckerberg and former board members personally liable for the fines and legal costs Meta Platforms incurred after a 2019 $5 billion fine. This fine was imposed for alleged breaches of a 2012 agreement with the US Federal Trade Commission (FTC) designed to protect Facebook users’ privacy.
Among those scheduled to appear in court were notable figures including Marc Andreessen, co-founder of Andreessen Horowitz; Peter Thiel, co-founder of Palantir Technologies; and Reed Hastings, co-founder of Netflix. The shareholders alleged that the directors failed to oversee the company’s compliance with the FTC agreement and accused Zuckerberg and former COO Sheryl Sandberg of knowingly running Facebook as an illegal data harvesting operation.
The case follows the Cambridge Analytica revelations that millions of Facebook users’ data were improperly accessed by the now-defunct political consulting firm, which worked on Donald Trump’s 2016 US presidential campaign. The 2019 FTC fine was then the largest ever imposed for privacy violations.
The defendants have consistently denied the allegations, calling them “extreme claims.” Shareholders had sought to have the 11 defendants cover the company’s fines and costs from their personal wealth. Meta itself, which rebranded from Facebook in 2021, is not a defendant and declined to comment on the settlement.
On Wednesday, former Meta board member Jeffrey Zients testified that the company did not accept the FTC fine to shield Zuckerberg from liability, countering the shareholders’ claims.
In response to ongoing privacy concerns, Meta states it has invested billions of dollars since 2019 to enhance user privacy protections.
The case also highlights a broader trend in corporate governance. Andreessen Horowitz recently announced it was moving its incorporation from Delaware to Nevada, citing unpredictability in Delaware courts following rulings such as the rescinding of Elon Musk’s $56 billion Tesla pay package. Musk himself has relocated his companies’ incorporation to Texas, encouraging others to consider alternative states.
