Meta CEO Zuckerberg To Testify In Landmark $8 Billion Facebook Privacy Trial
The lawsuit, initiated by disgruntled Meta shareholders, asserts that the company's board, including prominent figures like former Chief Operating Officer Sheryl Sandberg, neglected their fiduciary duties by not adequately overseeing privacy standards. The plaintiffs argue that this alleged oversight directly led to substantial fines such as the record $5 billion penalty imposed by the Federal Trade Commission (FTC) in 2019. The core of the complaint, though, revolves around a 2012 FTC consent decree, which Facebook (now Meta) agreed to, aimed at protecting user data. Shareholders contend that the executives continuously violated this agreement.
Central to the allegations is the infamous Cambridge Analytica scandal in 2018, which revealed that data from millions of Facebook users had been harvested without their consent by the now-defunct political consulting firm. Shareholders are seeking reimbursement for over $8 billion in fines and associated costs Meta incurred as a result of this scandal.
Adding another layer to the intricate legal challenge, plaintiffs also allege that Mark Zuckerberg engaged in unlawful stock sales. They claim he offloaded billions of dollars of Meta stock based on non-public information, anticipating a downturn in the company's value once the Cambridge Analytica scandal became public.
Zuckerberg and the other defendants have vehemently denied these accusations in court filings, dismissing them as "extreme claims." They assert that the company has invested heavily in privacy compliance, built a dedicated team to oversee privacy, and was, in fact, a victim of Cambridge Analytica's "studied deceit." Furthermore, Zuckerberg's legal team contends that his stock sales were conducted under prearranged trading plans, designed to protect against insider-trading allegations, and were intended to fund his philanthropic projects.
The non-jury trial—overseen by judge Kathaleen McCormick—in Wilmington, Delaware, is scheduled to last eight days and is expected to delve into decade-old events and boardroom discussions, scrutinizing how Meta's leadership implemented the 2012 FTC agreement.
This case carries significant weight as it marks the first time a shareholder lawsuit concerning board responsibility for a major corporate scandal has reached trial in Delaware. The state is traditionally known for its corporate-friendly legal environment, where such cases often get dismissed prematurely.
Thumbnail and Top Image Source: Anthony Quintano (CC BY 2.0) via Flickr
