Zuckerberg settles lawsuit over Cambridge Analytica scandal

Mark Zuckerberg and other Meta board members settled a shareholder lawsuit on Thursday, concerning decisions made in the wake of the Cambridge Analytica scandal.

Cambridge Analytica, a political consulting firm, was found to have improperly harvested Facebook users’ data for political advertising in 2016, surrounding that year’s US election and Brexit vote. A trial over the long-running case had just begun on Wednesday.

Defendants were accused of overpaying the US government in 2019 when they engineered a $5 billion settlement with the US Federal Trade Commission for alleged privacy violations in the scandal. Plaintiffs were seeking $8 billion in damages.

But the parties did not disclose details of the settlement and defense lawyers did not address the judge, Kathaleen McCormick of the Delaware Court of Chancery.

The settlement comes the same day that Marc Andreessen, one of Silicon Valley’s most influential venture capitalists and a board member of the company, was to take the stand.

Zuckerberg himself was expected in the Wilmington, Delaware courtroom on Monday, and other prominent Silicon Valley names were also due to face questioning, including investor Peter Thiel, Netflix co-founder Reed Hastings, and former Meta top executive Sheryl Sandberg.

When the scandal first emerged, it thrust Facebook and Zuckerberg in particular into a political firestorm, leading to major regulatory changes and public scrutiny of tech companies’ data practices.

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

The shareholders in the lawsuit alleged that the board members conspired to pay more to the US government in exchange for ensuring that Zuckerberg would not be named personally for wrongdoing in the settlement. They wanted the 11 defendants to use their personal wealth to reimburse the company.

The multi-faceted case also alleged insider trading at the time of the events, with board members to be questioned about the timing of their share sales before the scandal was made public.

The defendants denied the allegations, which they called “extreme claims.” 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.

Zuckerberg was under huge pressure at the time of the scandal from US and European lawmakers, at a time of widespread allegations that Russia and other bad actors were weaponizing Facebook to sow chaos around major elections in the West.

Longtime observers of the company were hoping that the trial would expose inside details of how Zuckerberg and the Facebook executives handled the scandal.

“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.

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.