$8 bn trial kicks off against Meta leaders over Facebook data harvesting
The lawsuit, initiated in 2018, stems from the Cambridge Analytica scandal, where data from millions of Facebook users was improperly accessed by the now-defunct political consulting firm that worked on Donald Trump's 2016 U.S. presidential campaign. In the wake of the scandal, the FTC fined Facebook $5 billion, citing a breach of its 2012 agreement to protect user data.
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A $8 billion trial against Meta Platforms, CEO Mark Zuckerberg, and other current and former company leaders kicked off on Wednesday in Delaware, alleging they illegally harvested Facebook user data, violating a 2012 agreement with the U.S. Federal Trade Commission (FTC), according to a Reuters report.
The non-jury trial, presided over by Chief Judge Kathaleen McCormick of the Delaware Chancery Court, is set to feature high-profile testimony from several billionaires, including Zuckerberg himself. Jeffrey Zients, White House chief of staff under President Joe Biden and a former Meta director, is expected to be among the first witnesses to take the stand. Other prominent defendants slated to testify include former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, and former board members Peter Thiel (Palantir Technologies co-founder) and Reed Hastings (Netflix co-founder).
The lawsuit, initiated in 2018, stems from the Cambridge Analytica scandal, where data from millions of Facebook users was improperly accessed by the now-defunct political consulting firm that worked on Donald Trump's 2016 U.S. presidential campaign. In the wake of the scandal, the FTC fined Facebook $5 billion, citing a breach of its 2012 agreement to protect user data.
Shareholders are now seeking to compel the defendants to reimburse Meta for the $5 billion FTC fine and other related legal costs, which plaintiffs estimate could exceed $8 billion. While a lawyer for the defendants, who have denied the allegations, declined to comment, court filings show the defense calling the allegations "extreme." They argue that evidence will demonstrate Facebook hired an outside consulting firm to ensure compliance with the FTC agreement and that the company was a victim of Cambridge Analytica's deception. Meta, though not a defendant in this specific case, has stated on its website that it has invested billions into protecting user privacy since 2019.
This trial is considered groundbreaking as it's the first of its kind to go to trial alleging that board members consciously failed to oversee their company. Proving such a claim is notoriously difficult under Delaware corporate law. However, a similar case against Boeing's current and former board members in 2021 resulted in a $237.5 million settlement, the largest ever for an alleged breach of oversight lawsuit, though the directors did not admit wrongdoing.
Beyond the privacy claims, plaintiffs also allege that Zuckerberg sold Facebook shares after anticipating a stock drop due to the Cambridge Analytica scandal, reportedly pocketing at least $1 billion. The defendants counter that evidence will show Zuckerberg did not trade on inside information and utilized a pre-planned stock-trading strategy designed to prevent insider trading.
Judge McCormick is expected to rule on liability and damages several months after the trial concludes.
