Trial against Meta higher-ups ends on 2nd day as investors, Zuckerberg reach settlement

Mark Zuckerberg and current and former directors and officers of Meta Platforms agreed on Thursday to settle claims seeking $8 billion for the damage they allegedly caused the company by allowing repeated violations of Facebook users’ privacy, a lawyer for the shareholders told a Delaware judge on Thursday.

None of the parties disclosed details of the settlement, and defence lawyers did not address the judge, Kathaleen McCormick of the Delaware Court of Chancery. McCormick adjourned the trial — which was entering its second day — and she congratulated the parties.

The plaintiffs’ lawyer, Sam Closic, said the agreement came together quickly.

Billionaire venture capitalist Marc Andreessen, who is a defendant in the trial and a Meta director, was scheduled to testify on Thursday.

Shareholders of Meta sued Zuckerberg, Andreessen and other former company officials, including its former chief operating officer, Sheryl Sandberg. Their case was based on billions in fines and legal costs paid by Facebook in the wake of the Cambridge Analytica scandal, in which data from tens of millions of Facebook users was accessed by the now-defunct consulting firm. 

The costs included a $5 billion fine from the Federal Trade Commission in 2019 after it found that Facebook failed to comply with a 2012 agreement with the regulator to protect users’ data.

The shareholders wanted the 11 defendants to use their personal wealth to reimburse the company. The defendants denied the allegations, which they called “extreme claims.”

Facebook changed its name to Meta in 2021, and the company was not a defendant.

The company declined to comment. A lawyer for the defendants did not immediately respond to a request for comment.

“This settlement may bring relief to the parties involved, but it’s a missed opportunity for public accountability,” said Jason Kint, the head of Digital Content Next, a trade group for content providers.

Zuckerberg was expected to take the stand on Monday and Sandberg on Wednesday. The trial was scheduled to run through the end of next week.

The case was also expected to include testimony from former Facebook board members Peter Thiel, co-founder of Palantir Technologies, and Netflix co-founder Reed Hastings.

Meta investors alleged in the lawsuit that former and current board members completely failed to oversee the company’s compliance with the 2012 FTC agreement, and they claimed that Zuckerberg and Sandberg knowingly ran Facebook as an illegal data-harvesting operation.

The case followed revelations in 2018 that data from millions of Facebook users was accessed by Cambridge Analytica, which worked for Donald Trump’s successful U.S. presidential campaign in 2016. Those revelations led to the FTC fine, which was a record at the time.

On Wednesday, an expert witness for the plaintiffs testified about what he called “gaps and weaknesses” in Facebook’s privacy policies but would not say if the company violated the 2012 agreement that Facebook reached with the FTC.

Jeffrey Zients, a former board member, testified on Wednesday that the company did not agree to the FTC fine to spare Zuckerberg legal liability, as shareholders allege.

On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019.

The trial would have been a rare opportunity for Meta investors to see Zuckerberg answer probing questions under oath.

In 2017, Zuckerberg was expected to testify at a trial involving a lawsuit by company investors opposed to his plan to issue a special class of Facebook stock that would have extended his control over that company. That case also settled before he took the stand.

“Facebook has successfully remade the ‘Cambridge Analytica’ scandal about a few bad actors rather than an unravelling of its entire business model of surveillance capitalism and the reciprocal, unbridled sharing of personal data,” Kint said.

“That reckoning is now left unresolved.”