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Meta investors settle lawsuit over Cambridge Analytica, FTC payout
Terms of the settlement, which were reached one day after the trial started, weren't immediately disclosed. Representatives from Meta declined to comment.
The deal would end a legal fight over the way company leaders handled the Cambridge Analytica data privacy scandal, including claims that the company overpaid in a 2019 Federal Trade Commission settlement in order to personally protect Chief Executive Officer Mark Zuckerberg.
The litigation in Delaware Chancery Court focused on the $5 billion that Meta, then known as Facebook, paid to settle with the FTC over privacy issues. The case followed an issue with Cambridge Analytica, in which an outside developer collected personal data from millions of Facebook users without their consent. The political research firm was hired by Donald Trump's 2016 election campaign.
Meta shareholders accused the company's top executives of turning a blind eye to red flags over Cambridge Analytica's data practices, then pushing the company to overpay the FTC so that Zuckerberg would not be held personally liable. Shareholders were seeking at least $7 billion in damages to be repaid back to the company.
The trial opened Wednesday with testimony from a director at the time of the FTC deal, Jeffrey Zients, who was later former President Joe Biden's chief of staff. He said the board asked its lawyers to approach the FTC with a proposal that it was willing to pay billions of dollars to settle allegations but would not accept any agreement that held founder Zuckerberg personally responsible.
Board members 'felt it was important to get this behind us so we could focus on growth,' Zients said. They believed Zuckerberg, as CEO, was essential to the business and 'there wasn't any indication' he personally had anything to do with the privacy missteps related to political consulting firm Cambridge Analytica, he said.
Zuckerberg, former Chief Operating Officer Sheryl Sandberg, and prominent venture capital investors Marc Andreessen and Peter Thiel were expected to testify during the eight-day trial. Andreessen, who still sits on the company's board, was expected on the witness stand Thursday.
A spokesperson for Sandberg did not immediately respond to a request for comment.
By proceeding to trial, when similar claims typically fail to survive a motion to dismiss, Meta appeared to have a story to tell about what happened with the FTC settlement and Cambridge Analytica, said Paul Regan, Widener University Delaware Law School professor.
But a settlement eliminates the need to explore the evidence through trial. 'If they can wrap this thing up for a number they like, it's basically a pretty cool math calculation,' Regan said.
The case is Facebook Derivative Litigation, 2018-0307, Delaware Chancery Court.
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