Meta Shareholders reach agreement over Facebook's data misuse, avoiding trial testimony.
Meta Platforms and its CEO, Mark Zuckerberg, have agreed to settle an $8 billion lawsuit filed by company shareholders. The lawsuit accused Zuckerberg and other executives, including former COO Sheryl Sandberg and board member Marc Andreessen, of failing to protect user privacy. Ultimately, this resulted in significant financial penalties and reputational damage. The settlement was announced on July 17, 2025, just as the trial was set to enter its second day in Delaware's Court of Chancery. However, the exact terms and clauses of the settlement are unknown.
Background of the Lawsuit
The lawsuit is a backdrop of the 2018 scandal involving Cambridge Analytica, where personal data of millions of Facebook users was used without consent. To this, investors alleged that Meta's leadership violated their duties by allowing such data misuse. This eventually resulted in a $5.1 billion fine from the Federal Trade Commission (FTC) and a $725 million settlement with affected users. Shareholders sought reimbursement for these costs, totaling an estimated $8 billion.
Zuckerberg and Team Bypass Testifying
The $8 billion settlement, which happened just before the trial, prevents Zuckerberg and other executives from testifying under oath. This would have potentially created a scenario that could have exposed internal communications and decision-making processes. Notably, Sandberg, Meta’s COO, had been sanctioned earlier in the litigation for deleting potentially sensitive emails, which could have complicated her defense.
Although the swift settlement may suggest challenges in holding executives personally accountable under this standard. While Meta was not a defendant in the lawsuit, the company has stated that it has since invested heavily in enhancing user privacy protections.
Criticism and Public Perception
Despite the settlement, some critics argue that it allows Meta's leadership to avoid full accountability for their role in the privacy violations. Jason Kint (Head, Digital Content for Next) mentioned,
“This settlement may bring relief to the parties involved, but it’s a missed opportunity for public accountability."
The case has also drawn attention to the wider issue of data privacy in the tech industry and the effectiveness of legal mechanisms in holding executives accountable for corporate misconduct.
