In a shareholder lawsuit alleging that they enabled numerous privacy violations by Meta Platforms, Mark Zuckerberg and a number of current and former directors have reached a settlement. The executives were charged in the lawsuit, which sought $8 billion in damages, with failing to stop serious legal and regulatory repercussions from Facebook’s handling of user data. On Thursday, the second day of the trial at the Court of Chancery in Delaware, the settlement was made public. The case did not include Meta as a defendant.
The plaintiffs contended that Meta’s management was to blame for permitting expensive penalties, including the $5 billion fine levied by the Federal Trade Commission (FTC) in 2019 for breaching a 2012 privacy agreement. The lawsuit aimed to hold board members Marc Andreessen, Sheryl Sandberg, Zuckerberg, and former COO Sheryl Sandberg personally accountable for the fines. The main allegations of the case were that Facebook’s data practices were unlawful and that the company’s leadership had neglected to implement the required privacy safeguards.
Unexpectedly, the lawsuit was swiftly resolved, and the details of the agreement are still private. The testimony of Sandberg and Zuckerberg, who were both scheduled to testify in the next few days, will no longer be necessary. Sandberg, who had been punished during the litigation for deleting private emails, which would have hurt her case in court, is among the defendants spared from testifying under oath by the settlement.
This case was the first trial involving “Caremark claims,” which allege that the board of a company failed to maintain legal compliance. Such claims have historically been hard to win under Delaware law, and even if the plaintiffs had won, there probably would have been an appeal.
The settlement of the case comes after Facebook’s privacy policies have been under constant scrutiny, particularly in the wake of the Cambridge Analytica scandal, in which millions of user data were exploited for political purposes. The settlement has drawn criticism for preventing meaningful public accountability for Meta’s wider data-sharing practices, according to Jason Kint, CEO of Digital Content Next.
