By Meta Platforms’ CEO Mark Zuckerberg and a group of current and former directors and officers have reached a confidential, last-minute settlement with shareholders who accused them of personally costing the company billions through repeated privacy violations, dodging what could have been a landmark trial in Delaware.
The case marks one of the highest-profile attempts to hold Silicon Valley executives personally liable for failing to protect user privacy.
What sparked the trial?
In a major pushback, Meta investors filed a lawsuit against CEO Mark Zuckerberg, board member Marc Andreessen, former COO Sheryl Sandberg, and several others, aiming to hold 11 top figures personally accountable for more than $8 billion in fines and legal expenses linked to Facebook’s ongoing privacy controversies.
At the heart of the case was the US Federal Trade Commission’s massive $5 billion fine in 2019, a record penalty for breaking a 2012 deal to safeguard user data.
That action came on the heels of the Cambridge Analytica scandal, which exposed how data from millions of Facebook users was improperly accessed by a political consulting firm connected to Donald Trump’s 2016 campaign.
Shareholders argued that under Zuckerberg’s leadership, the board failed in its duty to oversee privacy practices, misled investors, and essentially ran Facebook like an “illegal data harvesting operation.”
Zuckerberg manages a last-minute settlement
A surprise, last-minute settlement brought an abrupt end to the trial in Delaware’s Chancery Court, a case that was set to feature testimony from some of Silicon Valley’s biggest names, including Mark Zuckerberg, Sheryl Sandberg, Marc Andreessen, Peter Thiel, and Reed Hastings.
Just as the second day of proceedings began, both sides announced they had reached a confidential agreement. The details of the deal weren’t made public.
The defendants maintained they had done nothing wrong, calling the allegations “extreme.”
Although Meta itself wasn’t named in the lawsuit, neither the company nor the individuals involved offered any comment beyond confirming that a settlement had been reached.
Since 2019, Meta says it has poured billions into improving its privacy practices and keeping up with changing regulatory demands.
The company also shelled out $725 million to settle a class-action lawsuit tied to the Cambridge Analytica data breach.
Still, while the recent shareholder lawsuit ended quietly with a behind-the-scenes deal, privacy advocates aren’t celebrating. Many see the abrupt and opaque settlement as a lost opportunity.
Although the agreement spared Meta’s top brass from a lengthy and potentially damaging trial, critics argue it also robbed the public of a rare chance to peek behind the curtain of Silicon Valley’s power structure and to hold some of its most influential executives publicly accountable.
The trial was set to explore a rarely tested question in Silicon Valley: whether top tech executives could be held personally responsible for how user data is handled.
These so-called “Caremark” claims, named after a key Delaware legal precedent, are notoriously difficult for shareholders to win, making the case especially significant.
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