Damages for data protection scandal? Zuckerberg in court
Mark Zuckerberg, Sheryl Sandberg, Peter Thiel, Mark Andreessen, and others are facing trial, sued for billions over lax data protection at Facebook.
Mr. Zuckerberg at a hearing of the US Senate Committee on Commerce, Energy, and Commerce in November 2020.
(Image: Screenshot)
Mark Zuckerberg and ten other prominent figures are now facing charges in a Delaware court. The defendants were top managers or board members of Facebook at the time when the company Cambridge Analytica harvested and monetized data from Facebook users, for example by supporting Donald Trump's first successful election campaign. The plaintiffs are shareholders of the Facebook group Meta Platforms. They say the defendants are responsible for Facebook's failure to comply with relevant data protection obligations, which caused financial damage to the company.
The defendants are to be held accountable for this and pay a total of US$8 billion in damages – not directly to the plaintiff shareholders, but to the damaged company Facebook (now Meta Platforms). The latter is incorporated under Delaware law and is not directly involved in the lawsuit. In addition to Meta CEO Zuckerberg, the defendants include former COO Sheryl Sandberg, Peggy Alford, Marc Andreessen, Erskine Bowles, Kenneth Chenault, Susan Desmond-Hellmann, Reed Hastings, Kostantinos Papamiltiadis, Peter Thiel, and Jeffrey Zients.
The lawsuit was filed in 2018, but there was much to be clarified. For example, since several lawsuits were combined, one of the plaintiff groups had to be assigned the leading role. In addition, sanctions were imposed on Sheryl Sandberg for deliberately destroying evidence.
On Wednesday, the courtroom phase began at the Delaware Court of Chancery. Testimony is expected from Zuckerberg, Sandberg, Andreessen, Thiel, Netflix co-founder Hastings, and others.
Who is the victim?
The data misuse by Cambridge Analytica that came to light in 2018 is one of the biggest scandals in Facebook's history. The now-bankrupt British company Cambridge Analytica had obtained data from 87 million Facebook users in an irregular manner. It had published a “survey” app called thisisyourdigitallife (TYDL), which some Facebook users took part in. However, thanks to the data company's privacy settings at the time, Cambridge Analytica also gained access to information about their Facebook friends. This data was subsequently misused for manipulative political campaigns.
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When this became known, Facebook came under heavy criticism and promised to improve its data protection. Various proceedings followed; in the US, Facebook had to pay a fine of five billion US dollars to the Federal Trade Commission (FTC), the highest fine in the history of the authority. A class action lawsuit in the country resulted in a settlement payment of $725 million by Meta. The SEC, the stock market regulator, imposed a comparatively modest fine of $90 million. In the UK, the company was fined a paltry half a million pounds, while in Italy the fine was €1.1 million.
The defendants would rather not compensate for the damage and see themselves as victims of Cambridge Analytica. Incidentally, the FTC was able to impose the penalty because Facebook had previously committed violations of lax US data protection laws. In 2012, the data company agreed to certain conditions with the FTC, which it then failed to comply with. This is what made the billion-dollar fine possible.
Evidence destroyed
It caused a stir when Sheryl Sandberg was caught destroying relevant evidence in the run-up to the trial. She had not only used her company email account for business purposes, but also her private Gmail account. After proceedings were initiated and she was specifically instructed to secure all evidence, Sandberg nevertheless deliberately deleted emails from her Gmail account that would have been relevant to the trial.
Zients was guilty of a similar offense. The plaintiffs therefore requested sanctions against both. In Zients' case, they were able to show that potentially relevant emails had been deleted, but not that these emails would actually have served as evidence in the proceedings. Judge Kathaleen St. Jude McCormick therefore did not sanction the man.
The situation was different for Sandberg: she had to reimburse certain legal and court costs and bears a higher burden of proof in the ongoing proceedings for facts she wishes to invoke in her defense. In addition, the destruction of evidence could have a detrimental effect in cross-examination and in any motions for (partial) judgments through summary proceedings.
The case is called In Re Facebook Derivative Legislation and bears the reference number 2018-0307-JTL. The ruling is not expected to be handed down for several months.
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