Facebook privacy practices the focus of $8 billion trial targeting Zuckerberg | Company Business News

Trial centers on alleged data privacy violations by Meta leaders

Meta shareholders seek $8 billion in damages

Defendants say they took steps to protect user privacy

WILMINGTON, Delaware, July 16 (Reuters) – An $8 billion trial by Meta Platforms shareholders against Mark Zuckerberg and other current and former company leaders kicks off on Wednesday over claims that they illegally harvested the data of Facebook users in violation of a 2012 agreement with the U.S. Federal Trade Commission.

Jeffrey Zients, White House chief of staff under President Joe Biden and a Meta director for two years starting in May 2018, is expected to be one of the first witnesses to take the stand in the non-jury trial before Kathaleen McCormick, chief judge of the Delaware Chancery Court.

The case will feature testimony from Zuckerberg and other billionaire defendants including former Chief Operating Officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, and former board members Peter Thiel, Palantir Technologies co-founder, and Reed Hastings, co-founder of Netflix.

A lawyer for the defendants, who have denied the allegations, declined to comment.

The case began in 2018, following revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm that worked for Donald Trump’s successful U.S. presidential campaign in 2016.

The FTC fined Facebook $5 billion in the wake of the Cambridge Analytica scandal, saying the company had violated a 2012 agreement with the FTC to protect user data.

Shareholders want the defendants to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than $8 billion.

In court filings, the defendants described the allegations as “extreme” and said the evidence at trial will show Facebook hired an outside consulting firm to ensure compliance with the FTC agreement and that Facebook was a victim of Cambridge Analytica’s deceit.

Meta, which is not a defendant, declined to comment. On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019.

The lawsuit is considered the first of its kind to go to trial which alleges board members consciously failed to oversee their company. This is often described as the hardest claim to prove in Delaware corporate law.

Boeing’s current and former board members settled a case with similar claims in 2021 for $237.5 million, the largest ever in an alleged breach of oversight lawsuit. The Boeing directors did not admit to wrongdoing.

In addition to privacy claims at the heart of the Meta case, plaintiffs allege that Zuckerberg anticipated that the Cambridge Analytica scandal would send the company’s stock lower and sold his Facebook shares as a result, pocketing at least $1 billion.

Defendants said evidence will show that Zuckerberg did not trade on inside information and that he used a stock-trading plan that removes his control over sales and is designed to guard against insider trading.

McCormick is expected to rule on liability and damages months after the trial concludes. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and David Gregorio)