Meta Platforms CEO Mark Zuckerberg and other high-ranking executives are in the hot seat as they face serious allegations in a Delaware court.
The Big Tech execs are being sued by shareholders over their failure to protect user data.
On Wednesday, a high-stakes non-jury trial began before Chief Judge Kathaleen McCormick in Delaware’s Court of Chancery.
The case revolves around accusations that Zuckerberg and other Meta executives neglected their duties to safeguard Facebook user data.
The mishandling of privacy data led to a record $5 billion fine by the Federal Trade Commission (FTC) and billions more in related costs.
The lawsuit, which seeks a staggering $8 billion in damages, argues that Zuckerberg, former Chief Operating Officer Sheryl Sandberg, former Vice President Konstantinos Papamiltiadis, and other directors should be held personally responsible for breaches of their fiduciary duties.
Shareholders contend that the company’s executives were negligent in ensuring that Facebook adhered to privacy standards, resulting in catastrophic privacy violations.
Zuckerberg and other prominent Meta figures, including Sandberg and Papamiltiadis, are expected to testify during the trial.
Additional high-profile potential witnesses like venture capitalist Marc Andreessen, Netflix co-founder Reed Hastings, and former PayPal executive Peter Thiel are also expected to appear before the court.
These figures, who served on Meta’s board during the period in question, could provide critical testimony regarding the company’s privacy practices.
The heart of the case is Facebook’s 2012 consent decree with the FTC, which was a response to earlier privacy concerns.
The agreement required the company to provide “clear and prominent notice” to users about data collection and obtain users’ “express consent” before sharing their data beyond their privacy settings.
The lawsuit alleges that Facebook’s executives and board members intentionally ignored the requirements of this decree, which ultimately led to the notorious Cambridge Analytica scandal.
In that scandal, data from up to 87 million Facebook users was improperly accessed by the political consulting firm Cambridge Analytica.
The firm exploited this data to build political profiles for use in the 2016 U.S. presidential campaign, sparking a global uproar and drawing the attention of lawmakers and regulators worldwide.
In response, the defendants argue that they did take measures to comply with the FTC’s privacy requirements, asserting that Facebook was misled by Cambridge Analytica.
They also claim that Zuckerberg did not improperly profit from his stock trades, citing a stock-trading plan designed to prevent insider trading.
However, the plaintiffs point to the company’s policies, which allowed third-party apps to collect not only user data but also data from users’ friends.
They argue that this oversight enabled the Cambridge Analytica breach to occur in the first place.
The fallout from the scandal was enormous.
In 2019, the FTC slapped Facebook with a record $5 billion fine.
It was the largest fine ever imposed in a privacy enforcement action at the time.
Investigations in the U.K. and other regions revealed that better compliance with the 2012 order could have prevented the data breach, further fueling criticism of Meta’s handling of user privacy.
As this trial unfolds, it’s clear that Zuckerberg and Meta are facing significant scrutiny for their role in one of the most damaging privacy breaches in history.
With billions on the line, this case could have profound consequences for the tech giant and its leadership.
As shareholders seek accountability, the outcome could reshape how companies handle user data and privacy in the future.
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