Big tech just dodged a bullet. Meta, the social media giant once known as Facebook, has settled an $8 billion lawsuit with shareholders over privacy violations, keeping CEO Mark Zuckerberg and other high-profile board members out of the courtroom hot seat.
According to the New York Post, this settlement, announced on a Thursday, resolves claims of negligence in data protection, sparing Zuckerberg and others from testifying about a record-setting $5 billion fine from the Federal Trade Commission in 2019.
The story begins with Facebook’s failure to honor a 2012 data protection agreement. This lapse led to the massive FTC fine after it emerged that data from millions of users was accessed by Cambridge Analytica, a now-defunct political consulting firm tied to a major 2016 presidential campaign.
Shareholders pointed fingers at Meta’s leadership, alleging that Zuckerberg and former COO Sheryl Sandberg knowingly turned a blind eye to data harvesting practices. They claimed the board’s negligence cost billions in fines and legal fees.
The lawsuit targeted not just Zuckerberg but also billionaire board members like venture capitalist Marc Andreessen. Former directors Peter Thiel, co-founder of Palantir Technologies, and Reed Hastings, co-founder of Netflix, were also lined up to testify.
Zuckerberg was set to face questions on a Monday, with Sandberg scheduled for Wednesday. Andreessen’s testimony was planned for the same Thursday as the settlement announcement, but all were spared as the deal was struck.
Unfortunately for curious investors, Meta isn’t talking, and the terms of the settlement remain undisclosed. The trial, expected to stretch through the end of the following week, ended abruptly with this agreement.
Shareholders had argued the $5 billion fine was a shield to protect Zuckerberg from personal liability. That’s a hefty price for corporate cover, if true, and it raises questions about accountability at the top.
However, not everyone agreed with this narrative. Former board member Jeffrey Zients, who later served as former President Joe Biden’s chief of staff, testified that the fine wasn’t just about shielding the CEO.
An expert witness for the plaintiffs spoke on a Wednesday about flaws in Facebook’s privacy policies. While pointing to weaknesses, the expert stopped short of confirming a direct violation of the 2012 agreement.
The defendants, including Meta’s leadership, pushed back hard against the claims. They dismissed the accusations of deliberate misconduct as overblown, denying any intentional wrongdoing.
Meta has since emphasized its commitment to privacy, stating on its website that billions have been invested in data protection since 2019. But for skeptics of big tech, this may feel like too little, too late.
For wealth-builders watching Meta, this settlement is a mixed bag. It avoids the PR disaster of a public trial but leaves unanswered questions about governance and risk management at one of the world’s largest companies.
From a free-market perspective, Meta’s ability to settle without admitting guilt is a win for corporate liberty, but it also highlights the need for sharper oversight by shareholders. If you’re holding Meta stock, consider digging into their privacy investments and board decisions as part of your due diligence.