Mark Zuckerberg and former Meta executives have agreed to end shareholders’ claims that the company’s leaders knowingly misled users regarding its data sharing in violation of an FTC order.
Key takeaways
- Shareholders had alleged that Meta executives knowingly violated a 2012 FTC data privacy order arising out of the Cambridge Analytica scandal by continuing to sell users’ data
- The settlement ended the trial after just one day
- The scandal’s effects are still posing legal and regulatory challenges for Meta
Shutterstock.com/Frederic Legrand - COMEO
Meta shareholders had alleged that the company’s executives – chief executive Mark Zuckerberg, former chief operating officer Sheryl Sandberg and former vice president Konstantinos Papamiltiadis – misled users about the company’s personal data practices in violation of a 2012 US Federal Trade Commission (FTC) order.
The order required Meta – which was then known as Facebook – to implement and maintain a privacy programme, not deceive users regarding how their data was being shared and other mandates. However, in 2019, the FTC accused Meta of violating the 2012 order after the social media giant allegedly allowed consulting firm Cambridge Analytica to collect millions of users’ data without consent.
In 2019, Meta agreed to pay US$5 billion to settle the FTC’s claims. Meta shareholders argued that Meta agreed to pay the record-setting settlement to avoid Zuckerberg being named personally in the case.
Zuckerberg, Sandberg and Papamiltiadis were defendants in the shareholders’ case, which claimed that the executives knowingly violated the FTC order by continuing to sell users’ data and providing misleading privacy notices. Current Meta board member Marc Andreessen and former board members Jeffrey Zients and Peter Thiel were also defendants in the lawsuit. The shareholders claimed Andreessen, Zients and Thiel failed to manage the company’s compliance with the FTC consent order.
According to an ALM report, on day one of the trial, Zients testified that the FTC had originally sought much more than US$5 billion and that settling for that amount was “clearly better than the alternative.” Zients said the board saw “no indication in any of our work to date that [Zuckerberg] had done anything personally wrong here.”
Whilst this shareholder saga appears to have ended, Meta still faces numerous civil lawsuits and regulatory investigations regarding its role in the Cambridge Analytica scandal. Currently, the social media company is appealing the Canadian Privacy Commissioner’s claims that the scandal violated Canada’s national data privacy law.
Meta is also fighting the FTC’s reopening of the 2019 order, which a federal appeals court ruled that a district court has jurisdiction to decide if the regulator can reopen that matter.
In December 2024, Meta agreed to pay a record-setting US$35 million (A$50 million) to end the Australian Information Commissioner’s four-year legal battle regarding its sharing of Australians’ data to Cambridge Analytica.