Meta chief Mark Zuckerberg and several other members of the social media giant’s top brass agreed to settle increasingly heated privacy violation claims for the price of $8 billion.
It is far from the first time that the company, its subsidiary Facebook, or its executives have responded to alleged user privacy violations with billions upon billions of dollars.
The lawsuit at hand accused Zuckerberg and other Meta leaders of failing to prevent years of violations of Facebook users’ privacy. The claims, which were originally filed in September 2018, took years to process, eventually resulting in a trial at the Delaware Court of Chancery. But on just the second day of proceedings, with Zuckerberg himself set to testify early next week, the multibillion-dollar settlement was announced, to timing that many observers found suspicious and revealing.
While nobody at Meta will confirm that the settlement was reached to avoid having to testify, it very much looks like it to yours truly.
The case was brought by shareholders who accused Meta executives of many years’ worth of negligence and failure to enforce a 2012 agreement that was reached by the US Federal Trade Commission, which was designed to safeguard user data. The shareholders who filed the lawsuit claimed that Zuckerberg and former Meta Chief Operating Officer Sheryl Sandberg “knowingly ran Facebook as an illegal data harvesting operation.”
The shareholders wanted the 11 defendants they sued to use their personal wealth to reimburse the company after years of alleged reputational damage due to compiling privacy fiascos. The defendants denied the allegations, which they called “extreme claims.” The parties did not disclose details of the settlement. The plaintiffs’ lawyer, Sam Closic, said the agreement “just came together quickly.”
In 2019, Facebook paid a record-breaking $5.1 billion penalty after the FTC found the company had deceived users about control over their personal data. The FTC ordered Facebook to implement new restrictions and overhaul its corporate structure, ensuring greater accountability in decisions related to user privacy. This fine was imposed by the FTC after the agency concluded that Facebook had violated the earlier 2012 FTC order by deceiving users about their ability to control the privacy of their personal information. The investigation was triggered by the Cambridge Analytica meltdown which showed the data of 50 million users was obtained without express permission and used for political purposes.
The $5 billion penalty explains a large part of the $8 billion demanded by the shareholders this week. In addition, Meta faced several fines in the European Union (EU). Among others, a 1.2 billion euro ($1.4 billion) fine for Meta’s transfers of personal data to the US without explicit consent.
All this is why the shareholders wanted Zuckerberg and others to reimburse Meta an estimated $8 billion or more for the FTC fine and other legal costs. The shareholders also questioned the timing of share sales by the executives.
By settling, Zuckerberg and other defendants avoid having to answer probing questions under oath. In January, former Meta COO Sandberg was sanctioned for deleting sensitive emails related to the Cambridge Analytica investigation, complicating her testimony.
The Delaware Chancery Court will likely manage access to full court documents for this case through its case files or release them via public interest or watchdog groups as the settlement process concludes. Until then, speculation about the settlement’s magnitude will run rampant. What will remain unrevealed is the true reason why Meta’s executives chose to settle. But it stands to reason that they expected the damages of a continued trial and the associated testimonies would have been even more damaging.
In a time where Meta sees many WhatsApp users actively switching to other messaging platforms, primarily Signal and Telegram, due to growing concerns about privacy and data sharing practices and a data breach at Instagram which sparked global privacy concerns, the last thing the company needs is a magnifying glass due to an ongoing lawsuit.
What has become very clear, even without knowing all the details, is that those in the know feel that Meta keeps abusing users’ personal data for monetary gain.
Despite promises to obtain specific user consent, offer privacy settings, and improve practices, Meta has consistently disregarded users’ privacy.
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