• Meta’s shareholders settle out of court with company executives.
• Privacy violations cost the company billions.
• Key figures and executives spared public testimony.

Meta’s shareholders have settled with key members of the company’s leadership, past and present, before potentially revealing insights could be made public in open court.

Mark Zuckerberg, Marc Andreessen, and former COO at Meta, Sheryl Sandberg were held to be liable for billions of dollars lost in fines and legal costs by Meta (then Facebook), epitomised by the $5 billion fine levied by the Federal Trade Commission in 2019. The shareholders had asked for the defendants to pay lost monies back to the company from their personal wealth.

The trial was adjourned on its second day, with both parties agreeing to a settlement on undisclosed terms. Zuckerberg was due to testify in court today.

The fines levied by the FTC centred around the access by Cambridge Analytica to Facebook data which was held to be in breach of privacy regulations. Cambridge Analytica harvested the data of over 87 million Facebook users and used it commercially, notably in its work with Donald Trump’s successful first presidential campaign in 2016.

The agreement between the parties means that discussions held at board level at the company, and communications between the 11 named plaintiffs will not be publicly heard.

From friendships to data harvests

Facebook’s original mission to connect friends with one another in what became the prototypical social media model was transformed by COO Sandberg who introduced advertising onto the platform as a way of monetising what was still Facebook. Since then, the company’s re-brand and significant changes in strategy have positioned Meta’s stable of platforms into what Zuckerberg envisages as an entertainment and global advertising platform.

In a separate antitrust court case with the FTC, Zuckerberg acknowledged earlier this year that the there had been a decline in the numbers of users engaging with posts from their friends and contacts on Meta and Instagram. He said that, as a company, Meta’s focus has shifted to “the general idea of entertainment…and discovering what’s going on.” He stated that many online platforms are blending their content, with material from other users, commercial concerns, influencers, and AI, in what he envisaged as the next evolutionary step in what is still termed social media.

Supplying users with what’s termed ‘personalised content’ is incumbent on data harvesting from the platform in use, and from as many third-parties as possible. Revealing the detail of how Meta’s strategic shift can continue to happen would have involved detailed descriptions being given in court as to methods and practice, and therefore have undermined the company’s carefully-worded statements on privacy and user data. Given that the Meta shareholders had demanded recompense from key individuals’ personal pockets, the potential embarrassment from finger-pointing and internal company bickering has also been avoided.

Free social media apps

The Cambridge Analytica scandal was the first large-scale revelation of what is, 13 years later, standard practice in the technology industry. A tacit agreement exists between users of a free-at-the-point-of-use services, and the supplying company’s use of personal information to create revenue. The details of exactly how this agreement plays out will not, in the case of Meta, be made public on this occasion.

The Meta shareholders’ willingness to agree terms speaks of their motivations in bringing the case to court: not the ideal of a private, privacy-respecting social platform, but recompense for the lost billions in company revenue that otherwise would have been paid to them in dividends. Meta was caught by the FTC infringing a 2012 agreement between the two organisations, and the 11 plaintiffs were merely careless enough to get caught doing so.

(Image: “Facebook” by Scott Beale is licensed under CC BY-NC-ND 2.0.)