Meta settles 8 billion dollar lawsuit regarding privacy breaches
July 18, 2025 |
The Cambridge Analytica scandal has a very long tail. Shareholders of Meta brought an action against Mark Zuckerberg and other Facebook directors over privacy violations. It is reported in the Times with Mark Zuckerberg settles $8bn lawsuit over Facebook privacy claims and the BBC with Meta investors settle $8bn lawsuit with Zuckerberg over Facebook privacy. The core of the case was a claim against Facebook directors for their failures which resulted in fines and legal costs associated with the Cambridge Analytica scandal. The problem for the defendants was that Facebook entered into an agreement in 2012 regarding compliance with privacy obligations. The other difficulty for the defendants was the scale of the data harvesting and the deceptive practices to do it.
The timing of the settlement is ironic given Meta previously complained about privacy laws in Australia in the context of the development of AI laws and proposed social media age restrictions in Australia. Meta complaining about increased privacy protections!
It is difficult to draw comparisons between generally described litigation in the United States and what is possible under Australian law. That said claims can be made against directors under the Corporations Act by shareholders. There are also other causes of action under both statute and common law.
The Times article provides:
Mark Zuckerberg and a string of other technology billionaires have avoided giving evidence in an $8 billion trial over Facebook user privacy violations after reaching a last-minute settlement.
Zuckerberg and former Facebook directors including Marc Andreessen, the co-founder of Andreessen Horowitz, had been scheduled to appear in a Delaware court to defend their roles on the Facebook board when it was hit with a $5 billion fine in 2019 for alleged violations of an agreement with a US regulator to protect user privacy.
The case was also expected to feature testimony from former Facebook directors Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix.
Shareholders of Meta Platforms had sought to hold Zuckerberg and former Facebook directors liable for more than $8 billion in fines and legal costs the company paid in recent years to resolve claims that it had violated a 2012 agreement with the US Federal Trade Commission (FTC). The defendants denied the claims.
However, on Thursday a lawyer for the shareholders told a Delaware judge that a settlement had been reached. The parties did not disclose details of the settlement.
Meta investors alleged in the lawsuit that former and current board members failed to oversee the company’s compliance with the 2012 FTC agreement and claim that Zuckerberg and Sheryl Sandberg, former chief operating officer, knowingly ran Facebook as an illegal data harvesting operation.
The case followed revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct London-based political consulting firm that worked for Donald Trump’s successful US presidential campaign in 2016. Those revelations led to the FTC fine in 2019, which was a record at the time.
The shareholders wanted the 11 defendants to use their personal wealth to reimburse the company. The defendants have denied the allegations, which they have called “extreme claims”. Facebook changed its name to Meta in 2021. The company is not a defendant and declined to comment.
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 alleged.
On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019. Most publicly traded US companies are incorporated in Delaware, whose state budget relies on fees from chartering businesses.
Last week, Andreessen Horowitz said it was changing its state of incorporation to Nevada from Delaware, citing the lack of certainty in Delaware courts. The company pointed to two rulings, including one last year to rescind Elon Musk’s $56 billion pay package from Tesla.
After his pay package was rescinded, Musk led his companies to incorporate in Texas from Delaware and encouraged others to follow.
The BBC article provides:
Mark Zuckerberg has agreed to settle a multibillion dollar lawsuit with a group of shareholders over how top executives and directors at Meta handled repeated privacy violations by Facebook.
The shareholders were seeking $8bn (£6bn) in damages. It is unclear how much they agreed to settle for.
The settlement was announced on Thursday by a lawyer for the shareholders, just before the trial was about to enter its second day in a Delaware court. Meta declined to comment on the settlement.
The Meta shareholders had alleged that Mr Zuckerberg’s actions led to the Cambridge Analytica scandal in which the data of millions of Facebook users was leaked and used by a political consulting firm.
The shareholders had asked the judge to order the 11 defendants named in the case to reimburse Meta for more than $8bn in fines and legal costs, which they say the company has had to pay in order to resolve claims of users’ privacy breaches.
The shareholders also questioned the timing of share sales by top brass at the company.
Meta was formerly known as Facebook, and is the parent company of the social media platform, along with photo-sharing app Instagram and the messaging app WhatsApp.
The shareholder lawsuit was filed in 2018, after it was revealed that data from millions of Facebook users was accessed by Cambridge Analytica, a political consulting firm that worked for President Donald Trump’s 2016 election campaign.
Among the defendants was Jeffrey Zients, who served as Meta director for two years starting in May 2018, and was also former President Joe Biden’s White House chief of staff.
In testimony on Wednesday, Mr Zients acknowledged that a $5 billion Federal Trade Commission fine was substantial, but said that the company did not agree to pay it to protect Mr Zuckerberg from legal liability.
Other defendants included Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix.
The settlement allows the defendants to avoid testifying under oath.
Former chief operating officer Sheryl Sandberg had also been slated to testify.
“One thing that could have come out of a full trial is a full accounting of how Facebook came to adopt and approve any illegal practices,” said Ann Lipton, a law professor at the University of Colorado.
“It’s valuable for society to know how this happened and what went wrong that they were breaking the law, if they were breaking the law,” Lipton added. “That kind of exposure serves a valuable social purpose. We won’t get that accounting now.”
Meta was not a direct party to the lawsuit but has said that its has invested billions of dollars in privacy reforms since 2019.
Prior to the settlement, Chancellor Kathaleen McCormick, a Delaware judge, was set to hear testimony through next week before rendering a decision.
Last year, Ms McCormick drew the ire of Tesla boss Elon Musk after she rejected his $56 billion pay package.
The electric vehicle-maker has left Delaware and reincorporated in Texas.
The article about Meta’s complaint about Australian privacy laws provides:
Mark Zuckerberg’s Meta has told Anthony Albanese that a pursuit of “overly broad” changes to privacy laws would curtail its attempts to train artificial intelligence bots to mimic “human beings”.
Amid fears of AI job replacement and warnings the technology should be treated “alongside other societal-scale risks such as pandemics and nuclear war”, tech juggernaut Meta has told the Productivity Commission it needs to use data with personal information to authentically replicate how Australians speak and interact.
It marks the latest demand on the Albanese government from US tech giants, after Australia’s under-16s social media ban and news media bargaining code emerged as sticking points in tariff negotiations with the Trump administration.
Meta said discourse that took place on its platforms – including Facebook, Instagram and WhatsApp – “represents vital learning on both how individuals discuss Australian concepts, realities and figures, as well as, in particular, how users of our products engage”.
“This means that authentic and effective learning to ultimately power meaningful products of communication is best realised from training that includes those discussions and artefacts themselves,” Meta wrote in its submission to the Productivity Commission’s five-pillar productivity inquiry.
“Although there are databases of information that may not contain personal information, like Australian legislation, there are limits to the utility of such corpuses.”
“Human beings’ discussions of culture, art and emerging trends are not borne out in such legislative texts.
US-based Meta urged Australia to incorporate “innovation and economic interests as key objectives” of privacy law.
It said it was “concerned … overlapping regulatory frameworks and policy directions in Australia” would impact the “ability of companies such as Meta to use data and AI to protect the safety of Australian users and the integrity of our services”.
It nonetheless asserted it was “committed to ensuring robust privacy and data protection measures across our platforms”.
Similarly, search giant Google raised concern about the “lack of a text and data mining exception” under Australian copyright law, declaring AI “stands to change the global economic order”.
While not specifically discussing the training of AI models, Google warned against the “uncertainty” in the Australian landscape and the “chilling effect” it had on investment, productivity and innovation.
Google warned Australia could be left behind “given competitor governments in the Asia-Pacific region such as Japan and Singapore have implemented innovation-friendly AI policy regimes to boost their AI and economic competitiveness”.
Meta also raised concerns about Australia’s regulatory environment compared to international counterparts.
“We are concerned that recent developments are moving Australia’s privacy regime to be out of step with international norms, impose obligations on industry that conflict with broader digital policy objectives to promote age-appropriate and safe experiences online, and disincentivise industry investment in AI in Australia or in pro-consumer outcomes,” its submission read.
Meta also spruiked AI-driven personal advertising and said it was “important that any regulatory approach to targeted advertising not proceed from a mistaken assumption that such advertising is inherently detrimental to consumers”. Targeted advertising is one of the areas being considered for regulation under privacy law reforms.
Meta said its targeted advertising service had driven down advertising costs and increased the effectiveness of marketing, and also asserted “consumers also benefit from personalised advertising”.
Tech giant Amazon urged that in the Australian government’s reforms, there needed to be a “balance between protecting privacy and enabling legitimate business activities”. It urged that “privacy regulations do not unreasonably encroach on the ability of businesses to personalise content and services for their customers”, and urged a lighter touch than was being considered on regulation about personal regulation.
“The government has signalled an intention to introduce a ‘fair and reasonable’ test for the collection, use and disclosure of personal information,” its submission read.
“We continue to recommend that the test is modified by introducing a requirement to ensure that personal information is ‘processed lawfully, fairly and in a transparent manner’.”
Meta warned Australian businesses were lagging behind international counterparts in AI take-up, potentially missing out on the $81bn-$195bn economic uplift by 2034 it said AI could deliver.