Zuckerberg and Meta investors settle their $8 billion lawsuit over Facebook privacy violations.

A lawyer for the shareholders told a Delaware judge Thursday that Mark Zuckerberg and the current and former directors and officers of Meta Platforms (META.O) had reached an agreement to pay $8 billion to resolve claims that they had harmed the company by permitting repeated privacy violations of Facebook users.

Details of the settlement were not disclosed by the parties, and defence attorneys did not speak to Delaware Court of Chancery Judge Kathaleen McCormick. McCormick congratulated the parties and adjourned the trial just before the start of the second day.

The agreement just came together quickly, according to Sam Closic, the plaintiffs’ attorney.

Marc Andreessen, a director of Meta and a defendant in the trial, was set to testify Thursday. He is a billionaire venture capitalist.

Shareholders of Meta sued Zuckerberg, Andreessen and other former company officials including former Chief Operating Officer Sheryl Sandberg in hopes of holding them liable for billions of dollars in fines and legal costs the company paid in recent years.

In 2019, Facebook was hit with a $5 billion fine by the Federal Trade Commission for violating a 2012 agreement to protect user data.

The shareholders wanted the 11 defendants to pay back the company with their own money. The accusations were rejected by the defendants, who referred to them as “extreme claims.”
In 2021, Facebook rebranded itself as Meta. The business refused to comment and was not a defendant.

The business claims on its website that since 2019, it has spent billions of dollars safeguarding user privacy.

The defendants’ attorney chose not to comment.

“This settlement may bring relief to the parties involved, but it’s a missed opportunity for public accountability,” said Jason Kint, the head of Digital Content Next, a trade group for content providers.

Sandberg was scheduled to testify on Wednesday, and Zuckerberg on Monday. The trial was set to conclude at the end of the following week.

The case was also expected to include testimony from former Facebook board members Peter Thiel, Palantir Technologies (PLTR.O) co-founder, and Reed Hastings, co-founder of Netflix (NFLX.O).

By settling, Zuckerberg and other defendants avoid having to answer probing questions under oath. Sandberg was found during the litigation to have deleted what were likely her most sensitive emails and she was sanctioned, making it harder for her to tell her side of the story in court.

The settlement spares the plaintiffs from having to try a very challenging case. Meta investors alleged that former and current board members completely failed to oversee the company’s compliance with the 2012 FTC agreement. The lawsuit also claimed that Zuckerberg and Sandberg knowingly ran Facebook as an illegal data harvesting operation.

The oversight allegations are known as Caremark claims, considered the most difficult to prove under Delaware corporate law. It was the first time Caremark claims went to trial, and even if the plaintiffs had gotten a judgment in their favor, the case would have been appealed to the Delaware Supreme Court. That court has reversed major shareholder victories in recent years.

The case followed revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm that worked for Donald Trump’s successful U.S. presidential campaign in 2016. Those revelations led to the FTC fine, which was a record at the time.

On Wednesday, an expert witness for the plaintiffs testified about what he called “gaps and weaknesses” in Facebook’s privacy policies but would not say if the company violated the 2012 agreement that Facebook reached with the FTC.

Jeffrey Zients, a former board member, testified on Wednesday that the company did not agree to the FTC fine to spare Zuckerberg legal liability, as shareholders alleged.

The defendants’ legal team also showed the court notes that Zients had taken when he was on the board that seemed to show he was urging the board to make user privacy a top priority, which would undercut plaintiffs’ claims.

The trial settlement marks the second time Zuckerberg avoided testifying in the court. In 2017, Facebook abandoned a plan to issue a new class of stock as a way for Zuckerberg to extend his control over the company while selling his shares. The decision came a week before Zuckerberg was expected to testify in the Court of Chancery to defend the stock plan.

“Facebook has successfully remade the ‘Cambridge Analytica’ scandal about a few bad actors rather than an unraveling of its entire business model of surveillance capitalism and the reciprocal, unbridled sharing of personal data,” Kint said. “That reckoning is now left unresolved.”