by Michelle Edwards at UnCover DC
According to a pair of lawsuits made public on Tuesday, Facebook board members overpaid the Federal Trade Commission (FTC) an extra $5 billion in fines to settle a complaint by the agency and keep CEO Mark Zuckerberg from being held personally liable for the Cambridge Analytic data breach. The lawsuits claim the massive payment was contingent upon the FTC dropping plans to sue Zuckerberg and COO Sheryl Sandberg.
Shareholder Lawsuits Reveal Plan to Shield Zuckerberg
The lawsuits, filed by two groups of Facebook shareholders in Delaware’s Chancery Court, maintain that in early 2019, a draft complaint from the FTC listed both Zuckerberg personally and Facebook as co-defendants. The complaint asserts that Facebook’s lawyers had determined the company was looking at a fine of close to $107 million but instead agreed to pay a $5 billion penalty to the FTC to shield Zuckerberg and Sandberg. Two democrats—Commissioners Rohit Chopra and Rebecca Kelly Slaughter—voted against the settlement, stating Zuckerberg should have been held personally responsible. Citing internal discussions among the social media giant’s board members authorizing the massive overpayment of the FTC fine, one of the lawsuits declares:
“Zuckerberg, Sandberg, and other Facebook directors agreed to authorize a multi-billion settlement with the FTC as an express quid pro quo to protect Zuckerberg from being named in the FTC’s complaint, made subject to personal liability, or even required to sit for a deposition.”
The claim points out that on the same day the FTC settlement was announced—the largest settlement in U.S. history—the Securities and Exchange Commission (SEC) issued a statement saying it would fine Facebook $100 million as part of a settlement related to its investigation into the company’s handling of the data. Since the settlements, privacy and misinformation have remained an issue across Facebook and its other platforms, along with harassment and double standards for elite users, according to a recent WSJ series.
With Facebook admittedly neglecting to keep user privacy promises for nearly a decade, the second lawsuit claims the company failed in its obligation to protect the private data of its users. Neglecting to notify any of its 530 million customers that their information had been exposed, the lawsuit quotes an internal memo stating Facebook’s intention to minimize the Cambridge Analytics situation and not take measures to address it properly. The claim describes the social media monster’s plan to “normalize the fact that this [scraping of user data] activity is ongoing and avoid criticism that we aren’t being transparent about particular incidents.” The lawsuit declares:
Facebook thereby deliberated that it would not attempt to comply with its obligations to safeguard user data, further reflecting the company’s pervasive internal governance failures and the Individual Defendants’ continuing breaches of fiduciary duty.