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Facebook parent Meta will pay $725 million to resolve the Cambridge Analytica class-action lawsuit

Meta, Facebook’s parent company, has agreed to pay $725 million to settle a class-action lawsuit over the Cambridge Analytica data harvesting controversy.

In the Northern District of California, where the complaint was initially brought almost four years ago, the accord comes about four months after reports first emerged that Meta had suggested a settlement. Meta has countered the lawsuit during the intervening years, stating that Facebook users have no legitimate expectation of privacy after they join up for the service freely, a claim that the judge presiding over the case in 2019 deemed “simply erroneous.”

The business in question, Cambridge Analytica, is now defunct after a controversy involving the exploitation of data from tens of millions of Facebook users obtained through a survey app called MyDigitalLife to influence voter behaviour via targeted adverts. Meta (then known as Facebook) paid $5 billion to settle with the Federal Trade Commission (FTC) for the privacy scandal, $100 million to the Securities and Exchange Commission (SEC) for misleading investors, and a relatively small £500,000 ($600,000) to the U.K. Information Commissioner’s Office.

It’s important to note that while Cambridge Analytica was the initial target of this class action complaint, it has now expanded to include other organisations who may have inappropriately exploited data obtained from Facebook users.

Staring down the barrel of reality

Mark Zuckerberg, Meta’s co-founder and CEO, testified in front of Congress about the scandal, but his answers were somewhat evasive, and since then, aside from a carefully controlled testimony in front of the EU Parliament shortly thereafter, the upper echelons at Meta have not had to face any more direct questioning on the matter. With this litigation on the horizon, however, Zuckerberg, Sandberg, and Olivan were all scheduled to give testimony once again. It’s obvious that this is something Meta didn’t want, and it’s also obvious that it won’t happen now that a compromise has been struck.

The attorneys for the plaintiffs and Meta write in the court filing announcing the proposed settlement that the agreement reached between them is a “extraordinary outcome,” resulting in the “largest recovery ever achieved in a data privacy class-action and the most Facebook has ever paid” to end a private class-action lawsuit.

The amount of the recovery is particularly striking given that Facebook argued that its users consented to the practices at issue, and that the class suffered no actual damages. Plaintiffs dispute these characterizations, but acknowledge that they faced tremendous risks in this novel and complex case. In addition to the monetary relief obtained by Plaintiffs, Facebook has meaningfully changed the practices that gave rise to Plaintiffs’ allegations, as set forth in the declarations of two Facebook employees with knowledge of those facts.

Meta, said that the settlement was “in the best interest of our community and stockholders,” despite the fact that it will cost the company $725 million. As an added bonus, the settlement covers every Facebook user in the United States, however each applicant will only earn a few bucks.

However, final approval of the settlement is anticipated at a subsequent hearing on March 2, 2023.

But Meta won’t be hearing the last of Cambridge Analytica for a while, as the District of Columbia is suing Zuckerberg on the grounds that he bears sole responsibility for the scandal’s escalating failings.