Facebook privacy practices the focus of $8 billion trial targeting Zuckerberg

A monumental trial has commenced against Meta Platforms, with shareholders alleging that Mark Zuckerberg and other high-ranking executives illegally harvested user data, violating a prior agreement with the U.S. Federal Trade Commission (FTC). Starting Wednesday, this non-jury trial, presided over by Chief Judge Kathaleen McCormick of the Delaware Chancery Court, is set to explore these serious claims, which could result in financial repercussions exceeding $8 billion. One of the first witnesses expected to testify is Jeffrey Zients, who served as White House Chief of Staff under President Biden and was a director at Meta from May 2018. The trial will include testimonies from Zuckerberg and a roster of prominent figures, such as former Chief Operating Officer Sheryl Sandberg, board member Marc Andreessen, and former board members Peter Thiel and Reed Hastings, who co-founded Netflix. The origins of this lawsuit trace back to the revelations in 2018, when it was disclosed that data from millions of Facebook users was improperly accessed by Cambridge Analytica, a political consulting firm linked to Donald Trump’s 2016 campaign. Following this scandal, the FTC imposed a hefty $5 billion fine on Facebook, citing violations of a 2012 agreement aimed at safeguarding user data. Shareholders are demanding that the defendants reimburse Meta for the FTC fine and associated legal costs, which they estimate to exceed $8 billion. The defendants have characterized these allegations as “extreme” and assert that evidence presented during the trial will demonstrate that Facebook engaged an outside firm to ensure compliance with the FTC requirements, framing the company as a victim of Cambridge Analytica's deceptive practices. Meta, which is not a defendant in the case, has refrained from commenting but has publicly stated its commitment to investing billions in user privacy protections since 2019. This trial is noteworthy as it is the first of its kind focusing on claims that board members failed to adequately oversee their company's operations, a claim that is notoriously challenging to prove in Delaware corporate law. In a related aspect of the case, plaintiffs allege that Zuckerberg anticipated a decline in Facebook's stock due to the Cambridge Analytica fallout and sold off his shares, allegedly reaping over $1 billion in profits. The defendants counter that evidence will reveal that Zuckerberg acted in accordance with a pre-established stock-trading plan, which is designed to prevent insider trading and limits his control over stock sales. A ruling on liability and damages from Judge McCormick is expected to follow several months after the trial's conclusion.