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Meta Settles Shareholder Lawsuit Tied to $5B FTC Penalty, Zuckerberg Avoids Testimony

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Meta has reached a settlement in a high-profile shareholder lawsuit that accused the company’s board of failing to prevent massive breaches of user data—an oversight that plaintiffs said cost the company billions.

The agreement, revealed Thursday morning in a Delaware courtroom, came just as the second day of an anticipated eight-day trial was set to begin. A lawyer representing the plaintiffs, a group of pension funds with minor Meta holdings, informed the judge that the parties had reached a resolution.

The lawsuit had alleged that Meta’s directors ignored a 2012 consent decree with the U.S. Federal Trade Commission (FTC), which required Facebook to protect user privacy more aggressively.

That failure, plaintiffs claimed, ultimately led to the 2019 $5 billion FTC settlement, one of the largest ever imposed on a tech company, following data privacy lapses that enabled groups like Cambridge Analytica to access vast swaths of user data.

Speaking of both settlements and Zuckerberg’s successful evasion of testifying, Jason Kint, the head of Digital Content Next, a trade group for content providers, said,  “That reckoning is now left unresolved.”

“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.”

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While the specifics of Thursday’s settlement remain confidential, they are expected to be formally filed with the Delaware Court of Chancery in the coming weeks. A source close to the negotiations said discussions had stretched on for months and continued late into Wednesday evening, even after the trial had begun. According to this source, Meta’s directors and officers’ insurance policy will foot the bill.

The legal action, known as a derivative lawsuit, means that any proceeds will go to the company itself rather than being distributed directly to the shareholders. Such cases are rare but growing in frequency, as boards of major corporations increasingly face scrutiny over operational misconduct. However, Kint remains unsatisfied.

“This settlement may bring relief to the parties involved, but it’s a missed opportunity for public accountability.”

This case marked the first time Meta’s board was directly challenged in a Delaware trial over its internal oversight practices. The proceedings had been closely watched, not only because of the high-profile names involved, but also for the precedent it could set for corporate accountability.

Among the witnesses was Jeff Zients, who served on Meta’s board from 2018 to 2020 and was White House Chief of Staff under former President Joe Biden. He testified on Wednesday. Marc Andreessen, the influential venture capitalist and longtime Meta director, was slated to take the stand Thursday.

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Company founder and CEO Mark Zuckerberg, along with former COO Sheryl Sandberg, were expected to appear next week.

Meta’s legal team had been preparing to argue that the board’s decision to settle with the FTC in 2019 was reasonable and not indicative of negligence. However, the plaintiffs claimed that Zuckerberg’s control over the company allowed him to shape the outcome in a way that protected him from personal accountability, while leaving Meta to shoulder the financial burden.

Zuckerberg was also accused of insider trading, with the plaintiffs alleging he sold Meta stock while fully aware of the looming fallout from the company’s data privacy failures.

The case comes amid broader debate within the tech world over Delaware’s role as the go-to corporate jurisdiction. Like Tesla and Dropbox, Meta has reportedly been exploring a potential relocation to a state more favorable to founder-led governance structures. Andreessen Horowitz, the VC firm co-founded by Andreessen, recently announced plans to move a major subsidiary to Nevada and encouraged others in tech to consider similar moves.

Delaware Chancellor Kathaleen McCormick, who presided over the case, congratulated both parties on the resolution and stated that she looked forward to reviewing the final terms once they were submitted.

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Meta’s Quiet Push for Your Camera Roll Signals a New Era in AI Data Mining

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Meta is once again blurring the line between innovation and intrusion. The tech giant is quietly rolling out a new feature that gives it access to your entire camera roll—yes, even the photos you haven’t uploaded anywhere—and has yet to provide a straight answer about how it plans to use them.

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Facebook Employees ‘Outraged’ With Mark Zuckerberg For Keeping Trump’s Protest Posts Up

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Facebook CEO Mark Zuckerberg has been put under fire by his own employees this week after claiming that he wouldn’t be taking any enforcement action against a post made by the President of the United States following the murder of George Floyd.

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To Curb Disinformation, Facebook will Ban Deepfakes

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In an era of widespread political disinformation deployed by bad actors to influence democracies, Facebook has faced criticism for its policy of allowing advertisers to use its platform to spread false messages, particularly about politics. Facebook CEO Mark Zuckerberg has argued that such a policy is necessary to protect free speech, and that he doesn’t see Facebook’s role as one of censoring political messages. Certainly, the question of how to handle the spread of disinformation on social media networks is a tricky one, particularly during a time when the president’s reelection campaign overtly makes false claims in social media ads, most notably on Facebook, to influence the voting public. 

Rival social network Twitter has decided to address the problem by banning political ads on Twitter altogether, neatly sidestepping the issue by refusing to participate in it in any capacity. But even in the face of ongoing, intense criticism and action taken on other platforms, Zuckerberg has remained steadfast in his opinion, positioning Facebook as a platform that promotes free speech instead of one that polices the political views of its users. However, amid the intensity of the criticism directed at the social networking giant, Facebook has recently announced it would ban “deepfakes” on the site, an apparent concession to those who are worried about social media’s role in facilitating the spread of false information.

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So-called “deepfakes” are the result of new technology, made possible by advances in machine learning using neural networks, that can appear to show evidence of a person saying or doing something that they did not in fact say or do by manipulating video to superimpose an image of one person’s face onto another person’s head with near-perfect accuracy. Such videos can be difficult or impossible to detect, even by experts, and as the technology advances deepfakes become even more convincing and easy to make. 

While these moves are certainly steps in the right direction, they are likely not enough to stop the spread of fake news

Researchers and political observers around the world have understandably voiced concerns about the potential impact of deepfakes on the spread of information, as the very existence of deepfakes causes one to call into question the legitimacy of videos depicting well-known political figures, which were once considered ironclad evidence of a person’s speech and conduct. To illustrate this point, director Jordan Peele created a deepfake that appears to depict President Obama delivering a warning about the spread of disinformation. Even more disturbingly, deepfakes have also been used to create pornographic videos appearing to depict various well-known celebrities, in violation of these celebrities’ rights to control how their images are used in public forums.

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As the dangers that deepfakes pose to individuals and to society as a whole are clear, it’s no surprise that Facebook has taken the step of banning this type of video on its site. However, given the extent of the spread of misinformation online, this action alone is not nearly enough to ensure that bad actors cannot subvert democracies by spreading fake news. For one, deepfakes are difficult to detect, even using computer analysis; as such, Facebook launched the Deep Fake Detection Challenge in an attempt to improve the technology that can determine whether a video has been digitally manipulated. And while Facebook continues to allow the spread of falsehoods in the form of political advertisements, the company has also partnered with independent fact-checkers with the aim of informing users when they are encountering false information. 

While these moves are certainly steps in the right direction, they are likely not enough to stop the spread of fake news, especially given the level of sophistication exhibited by disinformation campaigns around the world, most notably Russia’s interference in the 2016 American presidential election and its likely interference in the upcoming election. While Facebook and other social media giants have learned some lessons from the election interference of the last several years, the rapid pace of technological advancement ensures that the fight against disinformation will not end anytime soon.

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How The Social Network Holds Up in 2019

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The Social Network, which dramatizes the rise of Facebook by depicting Mark Zuckerberg’s invention of the platform and the various lawsuits it spawned, was released in 2010 to widespread critical acclaim. But the social media landscape has transformed dramatically over the past decade, meaning today’s audiences likely have a much different view of Facebook and its controversial founder than those of the time of the movie’s release. As such, it is instructive to take a look back at this nearly ten-year-old classic to determine how the viewing experience has changed since the film initially hit theaters and whether the movie’s message about social media platforms continues to resonate. Happily, I can report that not only does the film hold up after nine years, but its message about the intersections of social media, technology, and society have never felt more prescient.

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Reviews of the film from 2010 were overwhelmingly positive; The Social Network currently boasts a 96% approval rating on review aggregate site Rotten Tomatoes, as reviewers praised the film’s clever dialogue, immersive acting, and fast-paced direction. While some critics took issue with the accuracy of the film’s depiction of events, calling its perspective biased, they nonetheless conceded that the core dramatic elements of the narrative were expertly crafted and represented. In 2010, however, public perception of Mark Zuckerberg and Facebook was very different; though the social media site had already exploded in popularity, amassing hundreds of millions of users, few could have predicted scandals like the ones involving Cambridge Analytica and Zuckerberg’s refusal to ban false political advertisements. Nine years ago, many observers had a vague understanding that social media would have a tremendous societal impact around the world, but few could predict the parameters of this impact.

The Social Network’s portrayal of the character of Mark Zuckerberg is harsh, to say the least. The film’s version of Zuckerberg is highly intelligent and ambitious, prizing upward societal advancement above all else, but nonetheless feels egotistical contempt towards existing social institutions, including his own personal relationships. Indeed, the film opens with a breakup between Zuckerberg and his girlfriend Erica Albright, who tells him, “You are probably going to be a very successful computer person. But you’re going to go through life thinking that girls don’t like you because you’re a nerd. And I want you to know, from the bottom of my heart, that that won’t be true. It’ll be because you’re an asshole.” The events of the movie explore and mostly defend this interpretation of Zuckerberg’s character, as he destroys his remaining interpersonal relationships with his smugness, contemptuousness, and derision while simultaneously building the largest social network the world has ever seen. Zuckerberg ends the film completely alone, sending a friend request to his ex-girlfriend on the platform he created, knowing the odds that she’ll accept his request are slim to none.

In a moment that bore little significance in 2010 but resonates eerily today, the film’s Zuckerberg describes the concept of “The Wall” as an element of Facebook’s design, which to modern audiences evokes images of today’s polarized political environment, characterized by resentment and hatred.

At the time, many felt that this view of Facebook and Mark Zuckerberg was needlessly harsh and pessimistic, as it implied that the company is better at alienating people and empowering psychopaths than it is at facilitating connections. The film predicts the transformational impact of social networks through the character of Sean Parker, who at one point says, “we lived on farms, then we lived in cities, and now we’re going to live on the internet!” even as the film’s characters grow increasingly isolated and alienated, in large part as a result of the toxic and destructive personality of the website’s founder. Public opinion about Mark Zuckerberg and about social networks generally was largely neutral or positive in 2010, as Zuckerberg was recognized mainly for becoming the world’s youngest billionaire and for inventing an innovative and promising digital platform.

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Today, however, public opinion has turned, particularly in the aftermath of social media’s enabling of the proliferation of fake news as well as successful attempts by Russia and other countries to leverage social media platforms to influence elections, which Zuckerberg has responded to less than forcefully. As such, The Social Network’s diagnosis of the societal impact of platforms like Facebook now seems more accurate than ever, as the paradox at the heart of the story, involving a combination of technology capable of connecting human beings with one another on an unprecedented scale and widespread feelings of isolation and social alienation, comes to fruition. In a moment that bore little significance in 2010 but resonates eerily today, the film’s Zuckerberg describes the concept of “The Wall” as an element of Facebook’s design, which to modern audiences evokes images of today’s polarized political environment, characterized by resentment and hatred. Accordingly, some critics have proclaimed The Social Network to be the defining film of the decade, as its themes serve as an ever better cultural critique today than they did in 2010.

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European Court Rules that Countries can Force Facebook to Delete Content

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On Thursday, Europe’s top court ruled that countries can force Facebook to delete content and restrict access to information globally, in a ruling that allows countries to ban access to information outside of their own borders. The decision came after a former Austrian politician sued in an attempt to force the social media company to take down negative commentary that had been posted about her on the site by individual users. The politician, Eva Glawisching-Piesczek, successfully argued that the company is obligated to restrict access to this information around the world, setting a legal precedent which empowers nations to essentially remove information from the internet at will.

As standards for privacy, defamation, and libel vary from country to country, this ruling has wide-reaching implications for how information can be regulated on the Internet, a platform which is by its very nature global and resistant to any one regulatory body. As it is nearly impossible to create a single set of standards for what information should be allowed on a global level, this ruling instead allows nations to enforce their own standards on a global level, concerning advocates for free speech who fear the ruling will lead to mass censorship of legitimate political discussion. Facebook strongly rebuked the ruling, claiming the judgment “undermines the longstanding principle that one country does not have the right to impose its laws on speech on another country.”

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Facebook, which is a company based in the United States, nonetheless has to obey the laws of all of the nations in which it operates. The ruling draws attention to the difference in philosophy between the regulation of information in the United States, which takes an almost entirely hands-off approach, and Europe, which is more likely to compel companies like Facebook to restrict access to information. A controversial privacy law in Europe, dubbed “the right to be forgotten,” allows European citizens to compel search engines like Google to remove links to their personal data from search results. No equivalent law exists in the US, and the European Court of Justice last week ruled that this law generally applies only within the European Union.

Facebook represents the public face of the spread of information during an era in which changes in how information spreads around the world has strongly influenced global politics. A report issued by the U.S. Department of Justice in March of this year found widespread interference in the integrity of American elections by Russian operatives, who leveraged social media sites like Facebook and Twitter to spread false information and to release stolen documents in a deliberate effort to favor one political party over another. This interference, conducted by a number of countries, is likely to continue and intensify during the 2020 US election and has been used in propaganda efforts at an unprecedented scale around the world. As a growing percentage of the US population gets their news from social media as opposed to more traditional and reputable news outlets, the electorate is increasingly likely to be unknowingly swayed by information that is propagated by a foreign power with the intent of undermining the integrity of elections.

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Facebook, for their part, has announced plans to take stronger preventative measures to deter the spread of fake news on their platform. Though the company was arguably complicit in allowing Russian interference in 2016 by taking a hands-off approach to the content of advertisers, the company has implemented plans to identify and label fraudulent activity on the site and has implemented stricter policies for what type of advertising they allow. That being said, the company has chosen not to limit the speech of politicians who advertise using the platform, even when they lie or break rules, as they claim that it’s “not [their] role to intervene when politicians speak.” Despite calls from Democratic contender Kamala Harris and others to ban Donald Trump for breaking the social media site’s rules, Twitter has taken a similar approach, allowing the President to repeat a false narrative that alleges corruption of his political rival Joe Biden.

The European Court’s ruling is just one of the conundrums Facebook and other social media platforms find themselves in with regards to regulating the spread of information around the world. As corporate entities, these platforms have virtually unlimited power to censor the speech they allow their users to circulate. However, there’s no denying that in recent years social media platforms have become more akin to a “public square” than a traditional publisher of information, which suggests they have a responsibility both to allow the free and open exchange of ideas and to curtail speech that poses a clear and present danger. How they, and the governments which have the power to regulate them, manage that responsibility is an ongoing question whose answer ultimately remains to be seen.