More than seven years since the scandal involving Facebook and the Cambridge Analytica consulting firm came to light, an $8 billion US class action lawsuit by investors against Mark Zuckerberg and other Meta board members is set to commence. The investors, led by Amalgamated Bank Inc., allege that the data harvesting of Facebook users in the Cambridge Analytica case violated a 2012 agreement with the US Federal Trade Commission (FTC).
This lawsuit, fiercely contested by Meta, reached the Supreme Court where justices initially heard arguments last November before unanimously allowing the case to proceed a few weeks later.
The scandal unfolded in 2018 when it was revealed that data from millions of Facebook users had been accessed by Cambridge Analytica through a quiz app called This Is Your Digital Life. The now-defunct firm was involved in political consulting for Ted Cruz and later for Donald Trump during his successful 2016 presidential campaign. Investors in Cambridge Analytica included Steve Bannon and Robert Mercer, a billionaire who supported Trump’s campaign after initially backing Cruz.
Facebook faced repercussions with the FTC imposing a $5 billion fine for breaching the 2012 agreement and settling with the US Securities and Exchange Commission for $100 million for misleading investors. In 2022, Facebook settled a class-action lawsuit with users for $725 million without admitting fault. The company has since emphasized its substantial investments in user privacy protection.
The upcoming trial will feature testimonies from Zuckerberg, former COO Sheryl Sandberg, venture capitalist Marc Andreessen, and others. Shareholders seek reimbursement for the FTC fine and legal expenses exceeding $8 billion. The defendants refute the claims, asserting Facebook’s compliance efforts with the FTC agreement and portraying the company as a victim of Cambridge Analytica’s deception.
The litigation will also address allegations that Zuckerberg sold Facebook shares anticipating a stock decline following the scandal. The defendants argue that Zuckerberg’s trades were not based on privileged information and were executed through a controlled stock-trading plan to prevent insider trading. Additionally, claims suggest that Sandberg and Zients used personal email accounts without preserving records as instructed.
The trial is expected to conclude with Judge Kathaleen McCormick ruling on liability and damages. The Cambridge Analytica scandal had global repercussions, leading to various litigations worldwide, including Canadian lawsuits and fines imposed in the UK and Australia. Despite the scandal’s political implications in 2018, experts have questioned Cambridge Analytica’s actual impact on voter behavior, suggesting that its influence may have been overstated.
