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The Hill
26 minutes ago
- Business
- The Hill
Meta CEO Mark Zuckerberg expected to testify in $8 billion Facebook privacy lawsuit
WILMINGTON, Del. (AP) — A $8 billion class action investors' lawsuit against Meta CEO Mark Zuckerberg and company leaders — current and former — begins Wednesday, with claims stemming from the 2018 privacy scandal involving the Cambridge Analytica political consulting firm. Investors allege in their lawsuit that Meta did not fully disclose the risks that Facebook users' personal information would be misused by Cambridge Analytica, a firm that supported Donald Trump's successful Republican presidential campaign in 2016. Shareholders say Facebook officials repeatedly and continually violated a 2012 consent order with the Federal Trade Commission under which Facebook agreed to stop collecting and sharing personal data on platform users and friends without their consent. Facebook later sold user data to commercial partners in direct violation of the consent order and removed disclosures from privacy settings that were required under consent order, the lawsuit alleges. The fallout led to Facebook agreeing to pay a $5.1 billion penalty to settle FTC charges. The social media giant also faced significant fines in Europe and reached a $725 million privacy settlement with users. Now shareholders want Zuckerberg and others to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than $8 billion. The first trial witness, privacy expert Neil Richards, testified Monday morning for the shareholders. 'Facebook's privacy disclosures were misleading,' said Richards, a professor at Washington University Law School. On cross-examination by a lawyer for the board of directors, he said he could not say whether the company had violated a 2012 consent order with the FTC. However, when asked about a PricewaterhouseCoopers report published in 2015 that found Facebook's privacy controls to be sufficient, Richards called such reviews 'of limited value' because they are based on information provided by the firm itself. The eight-day case will feature testimony from Zuckerberg and former Chief Operating Officer Sheryl Sandberg. Others expected to appear on the stand include board member Marc Andreessen and former board member Peter Thiel. It takes place in Delaware Chancery Court, where Facebook parent Meta Platforms Inc. is incorporated. A judge is expected to rule in the months after the trial wraps up. Meta took the case all the way to the Supreme Court to try to get it dismissed. Justices heard arguments in November and decided that it was wrong to take up the case in the first place. The high court dismissed the company's appeal, leaving in place an appellate ruling allowing the case to go forward.
Forbes
an hour ago
- Business
- Forbes
M&A Enforcement Easing Under The Trump Administration
(Original Caption) New York: Thomas Nast antitrust cartoon, 1888. "Sir James G. Blaine". Trump antitrust officials are easing up on mergers and acquisitions (M&A) enforcement, ditching a Biden administration policy of discouraging mergers. This change in direction could promote enhanced American innovation and economic growth. M&A Economic Benefits M&A activity generates a variety of major economic benefits: M&A Economic Costs M&A may, however, impose economic costs when it reduces competition in the marketplace. The Clayton Antitrust Act bars M&A transactions that may substantially lessen competition. Prior to the Biden Administration, a longstanding bipartisan enforcement consensus recognized M&A's general benefits. Federal antitrust guidelines from the Federal Trade Commission (FTC) and the Department of Justice (DOJ) stressed that those agencies would target only those M&A transactions that were likely to harm competition. Whenever possible, the agencies also worked with merging parties to 'cure' the potentially anticompetitive parts of a generally beneficial deal through structural (spinning off business assets) or behavioral (precluding future anticompetitive actions) remedies. The agencies did, of course, oppose unsalvageable anticompetitive deals. Biden Anti-Merger Policies DOJ and FTC leadership dramatically shifted gears and promoted an anti-merger policy: Pre-Biden Merger Policy Restored New FTC and DOJ Trump Administration leaders have public publicly committed to rolling back the Biden anti-merger agenda. DOJ Antitrust Division Deputy Assistant Attorney General William Rinner committed to restoring merger enforcement 'transparency and procedural fairness' in a June 4 speech. Rinner stated that DOJ rejected the Biden 'total deterrence' approach to mergers, that it would restore 'fairness and predictability' to merger reviews, and that it would be open to crafting settlements that allowed mergers to proceed whenever feasible. In a similar vein, new FTC Chairman Andrew Ferguson pledged that the FTC would 'stop [former FTC Chair] Lina Khan's war on mergers,' and restore fairness and speed to merger reviews, thereby enabling 'the economy . . . [can] thrive, businesses can bring their new ideas to market, and we can grow our way out of this debt crisis.' The FTC, like the DOJ, seeks to pursue settlements whenever it can. There already are indications that the new Trump FTC and DOJ are clearing mergers more quickly than was done under the Biden Administration. Specific Matters A rash of recent DOJ and FTC decisions on proposed mergers are in line with new agency leaders' recent bold pronouncements. It is doubtful that these mergers would have passed muster under the Biden Administration. Perhaps the most significant recent development is DOJ's June 28 decision to greenlight HPE's acquisition of Juniper Networks, subject to narrowly tailored structural and behavioral remedies. This merger brings together the second (HPE) and third (Juniper) largest wireless local network providers of wireless local area network (WLAN) in the United States (Cisco is number one). DOJ originally had opposed the merger, and a trial had been scheduled for this July. As I explained last month in Forbes, this tie-up promises substantial efficiency gains that could accrue to consumers and the broader U.S. economy. It also should create a second major U.S. WLAN competitor on the global stage, bolstering the U.S.'s strategic advantage in critical digital infrastructure. Other major deals have settled in recent weeks, creating potential procompetitive synergies benefiting the American economy: Another merger has been fully cleared by the FTC after a very quick review: Looking Forward Trump II merger enforcement is off to a very good start. Initial official pronouncements and a rash of merger approvals (some with 'fixes') are helpful. They signal to markets that an economically sound and expeditious merger review process, which respects due process, has been restored. Nevertheless, work still remains to be done. The Administration may wish to consider further steps to encourage welfare-enhancing mergers. Specifically, for example: Clarifications of merger policy that increase business regulatory certainty and incentivize dynamically efficient M&A transactions could bolster U.S. competitiveness in international markets, benefiting both American producers and consumers.
CTV News
2 hours ago
- Business
- CTV News
Trial begins as Meta investors, Zuckerberg square off over alleged privacy violations
WILMINGTON, Delaware — An US$8 billion trial by Meta Platforms META.O shareholders against Mark Zuckerberg and other current and former company leaders kicked off on Wednesday over claims they illegally harvested the data of Facebook users in violation of a 2012 agreement with the U.S. Federal Trade Commission. The trial started with a privacy expert for the plaintiffs, Neil Richards of Washington University Law School, who testified about Facebook's data policies. 'Facebook's privacy disclosures were misleading,' he told the court. Jeffrey Zients, White House chief of staff under President Joe Biden and a Meta director for two years starting in May 2018, is expected to take the stand later on Wednesday in the non-jury trial before Kathaleen McCormick, chief judge of the Delaware Chancery Court. The case will feature testimony from Zuckerberg and other billionaire defendants including former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen as well as former board members Peter Thiel, Palantir Technologies co-founder, and Reed Hastings, co-founder of Netflix. A lawyer for the defendants, who have denied the allegations, declined to comment. McCormick, the judge who rescinded Elon Musk's US$56 billion Tesla pay package last year, is expected to rule on liability and damages months after the trial concludes. The case began in 2018, following revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm that worked for Donald Trump's successful U.S. presidential campaign in 2016. The FTC fined Facebook US$5 billion in the wake of the Cambridge Analytica scandal, saying the company had violated a 2012 agreement with the FTC to protect user data. Shareholders want the defendants to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than US$8 billion. In court filings, the defendants described the allegations as 'extreme' and said the evidence at trial will show Facebook hired an outside consulting firm to ensure compliance with the FTC agreement and that Facebook was a victim of Cambridge Analytica's deceit. Meta, which is not a defendant, declined to comment. On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019. The lawsuit is considered the first of its kind to go to trial that alleges that board members consciously failed to oversee their company. Known as a Caremark claim, such lawsuits are often described as the hardest to prove in Delaware corporate law. However, in recent years, Delaware courts have allowed a growing number of these claims to proceed. Boeing's current and former board members settled a case with similar claims in 2021 for US$237.5 million, the largest ever in an alleged breach of oversight lawsuit. The Boeing directors did not admit to wrongdoing. The Meta trial comes four months after Delaware lawmakers overhauled the state's corporate law to make it harder for shareholders to challenge deals struck with controlling shareholders like Zuckerberg. The bill, which did not address Caremark claims, was drafted after the state's governor met with representatives of Meta. Most publicly traded companies are incorporated in the state, which generates more than a quarter of the state's budget revenue. Meta, which was reportedly considering leaving Delaware earlier this year, is still incorporated in the state. Andreessen Horowitz, the venture capital fund co-founded by Andreessen, said earlier this month that it was reincorporating in Nevada from Delaware and encouraged other companies to do the same. The company cited the uncertainty of the state's courts and referenced the Musk pay ruling. Andreessen is expected to testify on Thursday. In addition to privacy claims at the heart of the Meta case, plaintiffs allege that Zuckerberg anticipated that the Cambridge Analytica scandal would send the company's stock lower and sold his Facebook shares as a result, pocketing at least US$1 billion. Defendants said evidence will show that Zuckerberg did not trade on inside information and that he used a stock-trading plan that removes his control over sales and is designed to guard against insider trading. --- Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder, David Gregorio and Mark Porter
Forbes
3 hours ago
- Business
- Forbes
Meta Privacy Lawsuit: What To Know About $8 Billion Trial Against Zuckerberg Over Cambridge Analytica
Meta CEO Mark Zuckerberg, former COO Sheryl Sandberg and other billionaires tied to Facebook will go on trial in Delaware on Wednesday, as a week-long trial determines whether the company's past and present leadership will be forced to pay $8 billion in damages for knowingly violating a privacy agreement, which led to the Cambridge Analytica scandal. Meta CEO Mark Zuckerberg arrives to testify before a Senate Judiciary Committee hearing on Capitol ... More Hill in Washington on Jan. 31, 2024. Copyright 2024 The Associated Press. All rights reserved. Facebook shareholders sued the company's leadership in 2018, alleging they knowingly violated an agreement with the Federal Trade Commission by sharing data about users' friends with third-party apps without those friends' knowledge. Facebook, which rebranded to Meta in 2021, signed a consent order with the FTC in 2012, in which the company agreed to create a 'comprehensive privacy program' to address privacy concerns arising from its products. The FTC prohibited Facebook from misrepresenting how it maintains and shares 'covered information' about its users—such as their names, addresses, emails, or physical locations—and what controls users have over the privacy of that information. Zuckerberg, Sandberg and other Facebook leadership knowingly didn't comply with that agreement, the plaintiffs allege, as they still allowed third-party apps to collect app users' data about their friends and those friends' personal information, even if the friends didn't consent to using the app themselves. That issue came to light with the Cambridge Analytica scandal, in which millions of users' Facebook data was harvested through a third-party app, and that data was allegedly used to influence major political events such as Brexit and the 2016 election. The plaintiffs also allege Facebook entered into agreements with specific companies that granted them access to users' friend data, even after Zuckerberg said Facebook was making that data sharing more secure—making those agreements with companies run by venture capitalists Marc Andreessen and Peter Thiel and Netflix CEO Reed Hastings, who all also served on Facebook's board. The trial begins Wednesday in Delaware Chancery Court—as Meta is incorporated in the state—and will last for eight days. There's no jury in the trial and the judge will issue the verdict in the case. That will likely come out in the weeks or months following the trial, rather than when the trial wraps up. Zuckerberg, Sandberg, Thiel, Andreessen and Hastings are all expected to testify, according to Reuters. Who Are The Key Players Being Sued? Defendants in the lawsuit include Zuckerberg, Sandberg and former Facebook Partnerships VP Konstantinos Papamiltiadis, whom the lawsuit alleges knowingly made deals with third-party apps that violated the 2012 FTC agreement. The lawsuit also names Andreessen, Thiel and Hastings, who were board members at the time and allegedly knew about the non-compliance with the FTC consent order, given their companies were given favorable agreements that allegedly violated it. Other Facebook board members named in the complaint are former Bill & Melinda Gates Foundation CEO Dr. Susan Desmond-Hellman, eBay CFO Peggy Alford and former American Express CEO Kenneth Chenault. The lawsuit additionally names two former White House chiefs of staff as defendants based on their roles on Facebook's board: Erskine Bowles, who served during Bill Clinton's presidency, and former chief of staff to President Joe Biden, Jeff Zients, who served on the board prior to his role at the White House. $8 billion. That's how much the shareholders are asking for the defendants to pay in damages, which they said reflects the amount Facebook had to pay in costs as a result of the leaders' allegedly unlawful activities. What Else Does The Lawsuit Allege? The shareholders bringing the suit make a number of allegations suggesting the defendants in the case knew that they were not in compliance with their privacy obligations. Facebook allegedly moved a notice to users that their privacy could be shared with third-party apps to be more noticeable after reaching the consent order with the FTC, for instance, only to then move it back to the less-prominent place it was in before the order, allegedly with Zuckerberg's knowledge. Facebook's privacy head Yul Kwon also allegedly warned Zuckerberg and Sandberg in 2015 that the company was not doing enough to address privacy concerns, warning Facebook's 'privacy program was disorganized and under-resourced' and the company hadn't properly 'prioritized' privacy concerns, which was causing a 'colossal problem.' Zuckerberg and Sandberg allegedly didn't implement Kwon's suggestions for the improving privacy infrastructure until after Cambridge Analytica, however, and Kwon testified the company may have avoided that scandal had they heeded his advice. The plaintiffs also take issue with Facebook's board of directors approving a $5 billion settlement with the FTC in 2019, arguing they paid a higher-than-required rate in order to protect Zuckerberg and shield him from legal liability. The lawsuit separately details Zuckerberg selling approximately $5 billion in Facebook stock in 2018, which the plaintiffs allege he did because he knew about the company's non-compliance with its privacy obligations. What Do The Defendants Argue? The defendants strongly deny any claims of wrongdoing, alleging in a court filing the plaintiffs do not have any evidence to back up their claims of officials acting unlawfully and, 'To the contrary, the evidence will show that under the board's leadership, Facebook worked effectively to comply with the 2012 order.' 'The evidence will show that Facebook implemented a robust system of privacy controls' and consistently updated the FTC on its efforts, the defendants argued, claiming the evidence in the case 'negates plaintiffs' pleaded portrait of a company indifferent to compliance.' The defendants also allege their deals with specific companies allowing them to access more data did not violate the 2012 FTC order and that Zuckerberg's sale of his stocks was in compliance with the law and was done in order to fund his charitable pursuits. They also deny the Cambridge Analytica scandal reflects any wrongdoing on Facebook or its officials' part, alleging that while the scandal was 'decidedly a traumatic event' for the company, 'it was the product of Cambridge Analytica's studied deceit—not remotely the product of the bad faith inattention of Facebook's fiduciaries.' Forbes Valuation Forbes estimates Zuckerberg's net worth at $242.3 billion as of Wednesday afternoon, making him the third-richest person in the world. Many of the defendants named in the lawsuit are among the richest people in the world, including Sandberg (valued at $2.4 billion as of Wednesday), Andreessen ($2 billion), Thiel ($22.7 billion) and Hastings ($6.8 billion). Sandberg has already been punished as part of the lawsuit, as the ex-Facebook COO was sanctioned by the court in January for allegedly deleting personal emails that were material to the lawsuit. That could make it more difficult for her to prove her innocence at trial, Reuters noted, and information about the emails will not be used at trial. The former exec alleged she rarely used her personal email and that other users were copied on any now-deleted messages, so that the information was preserved. What Is The Cambridge Analytica Scandal? Cambridge Analytica was a voter-profiling company that obtained data from Facebook users through Cambridge University professor Dr. Aleksandr Kogan, who created a quiz on Facebook that was used to harvest data about users who opted into it and, by extension, their friends. That data was then shared with Cambridge Analytica, and The New York Times and The Intercept reported the firm used that data and other records to create 'psychographic profiles' for approximately 30 million people—despite only some 270,000 actually opting into using Kogan's app. Cambridge Analytica, which had ties to Trump adviser Steve Bannon, then used that data to work on various political campaigns in the ensuing years, including Brexit, the 2014 U.S. midterms and the 2016 presidential election, in which President Donald Trump's campaign and Sen. Ted Cruz, R-Texas, worked with the firm, according to the Times. The news of Cambridge Analytica's use of such vast Facebook data was first reported by The Guardian in 2015, which alleged Cruz was using the data. Further reports by The Guardian and The New York Times in 2018 then detailed the wider scope of the firm's work, thanks to a whistleblower exposing the firm. Those reports set off a series of investigations and legal actions, including the shareholder lawsuit. Facebook and Zuckerberg apologized for their role in the scandal after it came to light and imposed new privacy controls, and Zuckerberg testified to Congress, admitting the company 'didn't do enough to prevent these tools from being used for harm' and saying about the data breach, 'It was my mistake, and I'm sorry. I started Facebook, I run it, and I'm responsible for what happens here.' Cambridge Analytica filed for bankruptcy in 2018, and in addition to the $5 billion fine from the FTC, Facebook has also faced consequences for the scandal including paying a $100 million fine from the Securities and Exchange Commission, a $725 million legal settlement and a £500,000 (approximately $645,000) fine from the U.K. Information Commissioner's Office. Further Reading Meta ex-COO Sandberg sanctioned in investor lawsuit for deleting emails (Reuters) Meta Trial Over Cambridge Analytica Scandal Tests Chancery Court (Bloomberg) As Facebook Raised a Privacy Wall, It Carved an Opening for Tech Giants (New York Times)
Fast Company
4 hours ago
- Business
- Fast Company
4 tips to end unwanted subscriptions now that ‘Click-to-cancel' is over
A 'click-to-cancel' rule, which would have made it easier for consumers to end unwanted subscriptions, has been blocked by a federal appeals court days before it was set to go into effect. But there are ways to end those subscriptions and memberships, even if they take some work. The rule would also have required companies to disclose when free trials and promotional offers would end and let customers cancel recurring subscriptions as easily as they started them. But even without the new federal guidance, here are some ways to stay on top of subscription and membership fees. Use calendar reminders and regularly review your bills Experts at the Consumer Federation of America recommend setting calendar reminders for whenever a free trial period ends, to alert yourself to cancel promotional offers before the real recurring costs kick in. The auto-enrollment process, in which the company does not remind the consumer via email that a trial is about to end and higher monthly payments will begin, was also at the heart of the FTC's rule. 'No subscription business model should be structured to profit from a gauntlet-style cancellation process,' said Erin Witte, Director of Consumer Protection for the Consumer Federation of America, in a statement on the click-to-cancel rule. Regularly reviewing your credit card and debit card bills can also help you keep track of any recurring charges—including price increases you may have missed or that you didn't anticipate when trying out a new membership or subscription. Know the terms and conditions of a given subscription 'Companies make it easy for consumers to click to sign up and easy for the companies to automatically withdraw funds from consumers' accounts,' said Shennan Kavanagh, Director of Litigation at the National Consumer Law Center (NCLC) in a statement on the FTC's click-to-cancel rule. 'People should not (have to) spend months trying to cancel unwanted subscriptions.' Given the FTC's vacated rule, though, companies may still legally require that customers cancel memberships or subscriptions by phone, even as they permit signing up, enrolling, and paying bills online. Consumer advocates say this places an extra burden of time and energy on the consumer to stop an unwanted recurring fee, but sometimes knowing the terms of the subscription and getting on the phone is worth the trouble. There are some services that unenroll you Apps like Rocket Money and services like Trim, which is accessed through a browser, can keep track of your recurring monthly fees and subscriptions, for free—or for a fee—and can help you catch new ones or even unsubscribe from some services. For parents, especially, a service like Trim could help inform them that a child has started a new subscription, game or membership before the fees recur. And Rocket Money will actively work to end unwanted subscriptions for you, for a monthly price. If the company can't successfully end or cancel the subscription or membership, it will give the customer the information needed to do so. Trim also provides this service, in its premium form, for an additional fee. Resist deals when canceling The FTC is currently moving forward with preparations for a trial involving Amazon's Prime program, which accuses the retailer of enrolling consumers in its Prime program without their consent and making it difficult to cancel subscriptions. Often, when a consumer tries to cancel a subscription for something like Prime, which offers free delivery and streaming video, the company will offer a month or more of the subscription at a promotional rate—half off, or at other, better-seeming values, to entice a customer to stay. Staying strong in the face of what may appear to be a good deal can help you stop recurring monthly fees before you forget to cancel them again. Agreeing to yet another trial or promotional rate, which is another on-ramp to auto-enrollment, just continues the cycle, according to consumer advocates. What would the FTC's rule have done? The FTC's rule would have required businesses to obtain a customer's consent before charging for memberships, auto-renewals and programs linked to free trials. The businesses would have also had to disclose when free trials and promotional offers would end. The U.S. Court of Appeals for the Eighth Circuit said this week that the FTC made a procedural error by failing to come up with a preliminary regulatory analysis, which is required for rules whose annual impact on the U.S. economy is more than $100 million. The FTC said that it did not have to come up with a preliminary regulatory analysis because it initially determined that the rule's impact on the national economy would be less than $100 million. An administrative law judge decided that the economic impact would be more than the $100 million threshold, and the court decided to vacate the rule. Former President Joe Biden's administration had included the FTC's proposal as part of its 'Time is Money' initiative, which aimed to crack down on consumer-related hassles. The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
