Meta Board Resolves Investors’ Privacy Claims for $190 Million

Billionaire Mark Zuckerberg and other Meta Platforms Inc. directors agreed to a $190 million settlement of claims they failed to rectify repeated violations of Facebook users’ privacy and improperly engineered an accord to protect Zuckerberg from personal liability for the privacy missteps, court filings show.

The deal ended a July trial over investors’ claims Zuckerberg and other Meta board members mishandled the Cambridge Analytica data privacy scandal and improperly agreed to a $5 billion US Federal Trade Commission settlement to personally protect Zuckerberg, Meta’s CEO, according to a filing Thursday in Delaware Chancery Court.

Meta shareholders sought at least $7 billion in damages, arguing directors wrongfully overpaid in the FTC deal to prevent Zuckerberg from having to dig into his own pocket to cover some of the financial hit to the company. The case centered on disclosures that an outside developer collected personal data from millions of Facebook users without their consent. Cambridge Analytica used the information after being hired by now-President Donald Trump’s 2016 election campaign.

Meta shareholders sued Zuckerberg and other directors – including venture-capitalist Marc Andreessen – hopes a judge would hold them personally liable for billions and fines and legal costs tied to repeated serial violation of the company’s privacy policies.

FTC officials fined Facebook $5 billion in 2019 after finding it violated a 2012 agreement with regulators mandating it get users’ permission before the company shared their data. Facebook officials agreed not to contest the fine as part of a settlement.

Because it’s a derivative case — one that allows investors to sue board members on behalf of the company itself — the proposed settlement must be approved by Chancery Judge Kathaleen S.J. McCormick. The $190 million will go back to the company rather than to any individual investor.

Lawyers for Meta investors – which include retirement funds and an individual shareholder – laid out the accords terms in a filing. At the time the settlement was announced, the $190 million wasn’t made public.

The case is Facebook Derivative Litigation, 2018-0307, Delaware Chancery Court.

Top photo: A Meta store in Burlingame, California. Bloomberg.