Securities Regulation Daily Wrap Up, CORPORATE GOVERNANCE—Del. Ch.: Meta settles midtrial in $8 billion class action suit charging Facebook privacy violations, (Jul 18, 2025)

By Suzanne Cosgrove

Terms of the settlement with Facebook’s parent were not made public; it comes on top of a $5 billion civil penalty levied in 2019 by the FTC and the Department of Justice.

Meta shareholders reached a midtrial agreement on Thursday to settle a lawsuit filed in the Delaware Court of Chancery against Mark Zuckerberg, Sheryl Sandberg, and other current and former Meta directors and officers. As noted by counsel, the lawsuit centered on alleged breaches of fiduciary duty related to the Cambridge Analytica case, which allowed Facebook users' privacy to be violated (In re Facebook Inc. Derivative Litigation, No. 2018-0307-JTL (Del. Ch. July 17, 2025)).

According to Reuters, further details of the settlement were not immediately released. Securities Regulation Daily reached out to Meta representatives for comment, who did not respond. On its website, Facebook states that “since 2019, we’ve invested $5.5 billion in a rigorous privacy program that identifies and address privacy risks early and embeds privacy into our products from the start.”

Long-running case. On Friday, a SEC spokesperson also declined comment on the settlement. The SEC had filed a complaint in a Facebook privacy case in July 2019, alleging that for more than two years, Facebook made misleading statements in its required public filings about the misuse of its users’ data (SEC v. Facebook, Inc., July 19, 2019).

According to court documents, from 2016 until mid-March 2018, Facebook maintained that the risk of misuse of its users’ data was merely hypothetical. In fact, the SEC charged, Facebook had already become aware by December 2015 that a researcher had improperly sold information related to tens of millions of Facebook users to data analytics firm Cambridge Analytica.

As reported previously, the SEC found that in 2014 and 2015 Cambridge Analytica paid an academic researcher to collect and transfer data from Facebook to create personality scores for 30 million users. The company also gained access to underlying Facebook user data, including names, genders, locations, birthdays, and so-called "page likes." Cambridge Analytica used the information in its political advertising activities.

The Commission said Facebook aggravated the problem by lying to the press during the Cambridge Analytica investigation, saying that it had discovered no evidence of wrongdoing.

FTC’s restrictions. Also in 2019, Facebook, Inc. agreed to pay a $5 billion penalty -- the largest ever imposed on any company by the FTC for violating consumers’ privacy—and submit to new restrictions and a modified corporate structure that would hold the company accountable for the decisions it makes about its users’ privacy, to settle FTC charges.

The agency said that Facebook had violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.

Following the guidelines outlined in the FTC’s 2019 settlement, Facebook was to overhaul the way the company made privacy decisions by boosting the transparency of its decision making. The order also created greater accountability at the board of directors’ level, establishing an independent privacy committee of Facebooks board of directors.

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