Facebook Paid the FTC Billions to Personally Protect Zuckerberg, Lawsuit Claims

gizmodo.com
5 min read
fairly difficult
Building on years of litigation, a shareholders' suit claims that the $5 billion 2019 FTC settlement could have been a horse trade.
A hulking lawsuit made public this week accuses Facebook's board of agreeing to overpay the Federal Trade Commission billions of dollars in exchange for not personally suing CEO Mark Zuckerberg over the 2018 Cambridge Analytica data leak scandal.

Advertisement

The consolidated lawsuit, made up of multiple complaints filed by Facebook shareholders, was made public on Tuesday, courtesy of Jason Kint, CEO of Digital Content Next, a trade association that represents roughly 80 publishers, including the New York Times, Wall Street Journal, and Gizmodo parent company G/O Media . On Twitter, Kint dubbed this the "mother of all lawsuits."

The plaintiffs in the suits, which were filed publicly in the Delaware Court of Chancery in August, are Facebook shareholders, including pension funds for teachers, firefighters, police, nurses, judges, as well as a construction workers' union. They accuse Zuckerberg, Facebook COO Sheryl Sandberg, and Facebook board members Marc Andreessen and Peter Thiel of counts related to breach of fiduciary duty. They also accuse Thiel's data analytics firm, Palantir Technologies, of unfair competition. (Disclosure: Thiel secretly funded a lawsuit that bankrupted Gizmodo's former parent company, Gawker Media.)

"... 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," reads the complaint filed by Rhode Island's pension fund, which has since been consolidated with two other shareholder complaints. They specifically accuse the company of overpaying by agreeing to settle for $4.9 billion more than Facebook's maximum penalty, were the case to go through legal proceedings (which could leave Facebook vulnerable to discovery and a guilty plea).

The FTC has not publicly disclosed its alleged intention to sue Zuckerberg personally.…
Whitney Kimball
Read full article