Wednesday marks the beginning of an $8 billion trial by Meta Platforms against Mark Zuckerberg and other current and former company executives for allegedly unlawfully harvesting Facebook user data in violation of a 2012 agreement with the U.S. Federal Trade Commission.
President Joe Biden’s White House chief of staff, Jeffrey Zients, a former Meta executive who will serve as the director for two years beginning in May 2018, is anticipated to be among the first witnesses to testify in the non-jury trial before Delaware Chancery Court Chief Judge Kathaleen McCormick.
Zuckerberg will testify in the case along with other billionaire defendants, such as former CEO Sheryl Sandberg, venture capitalist and board member Marc Andreessen, and former board members Reed Hastings, co-founder of Netflix, Peter Thiel, and Palantir Technologies.
The defendants’ attorney, who has refuted the accusations, chose not to comment.
The issue started in 2018 after it was discovered that Cambridge Analytica, a now-defunct political consulting business that supported Donald Trump’s victorious 2016 U.S. presidential campaign, had obtained data from millions of Facebook users.
The FTC penalized Facebook $5 billion in the aftermath of the Cambridge Analytica scandal, stating the firm had broken a 2012 agreement with the FTC to secure user data.
The plaintiffs estimate the FTC fine and other legal expenses to be over $8 billion, and shareholders want the defendants to pay Meta back for these expenses.
The defendants characterized the accusations as “extreme” in court filings, stating that the evidence at trial will demonstrate that Cambridge Analytica duped Facebook and that the company recruited an independent consulting firm to assure compliance with the FTC agreement.
The non-defendant Meta chose not to comment.
The business claims on its website that since 2019, it has spent billions of dollars safeguarding user privacy.
The action, which claims that board members intentionally neglected to supervise their company, is thought to be the first of its sort to go to trial.
In Delaware corporate law, this is frequently referred to as the most difficult claim to prove.
A case involving identical allegations was settled by Boeing’s current and former board members in 2021 for $237.5 million, the highest amount ever paid in a lawsuit alleging a violation of oversight.
The directors of Boeing refused to acknowledge any misconduct.
Apart from the privacy claims at the center of the Meta lawsuit, plaintiffs also claim that Zuckerberg sold his Facebook shares, pocketing at least $1 billion, as he expected the Cambridge Analytica scandal to decrease the company’s stock value.
The evidence, according to the defendants, will demonstrate that Zuckerberg did not trade based on inside knowledge and that he employed a stock-trading strategy that takes away his influence over sales and is intended to prevent insider trading.
Months after the trial ends, McCormick is expected to decide damages and liability.
