Meta Platforms' top executives—including CEO Mark Zuckerberg—are at the center of a landmark $8 billion trial set to begin this Wednesday. The lawsuit, filed by Meta shareholders, alleges that Zuckerberg and several current and former company leaders violated a 2012 agreement with the U.S. Federal Trade Commission (FTC) by allowing the illegal harvesting of Facebook users' personal data.
The high-stakes trial will take place in the Delaware Chancery Court, presided over by Chief Judge Kathaleen McCormick, and marks a pivotal moment in corporate governance and privacy law.
The lawsuit stems from the 2018 revelations that Cambridge Analytica, a now-defunct political consulting firm, had gained access to the private data of millions of Facebook users. This data was used to support Donald Trump’s 2016 U.S. presidential campaign.
Following the scandal, the FTC imposed a $5 billion fine on Facebook, stating that the company had breached its 2012 agreement that required it to safeguard user data.
"Shareholders want the defendants to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than $8 billion."
The plaintiffs argue that Meta’s board of directors—including Zuckerberg, Sheryl Sandberg, Marc Andreessen, Peter Thiel, and Reed Hastings—failed in their fiduciary duties by knowingly allowing data misuse.
Mark Zuckerberg, Meta CEO
Sheryl Sandberg, former COO
Marc Andreessen, venture capitalist and Meta board member
Peter Thiel, Palantir co-founder and former board member
Reed Hastings, Netflix co-founder and former Meta board member
Also taking the stand will be Jeffrey Zients, the current White House Chief of Staff under President Joe Biden, who served on Meta’s board for two years starting May 2018.
“Jeffrey Zients... is expected to be one of the first witnesses to take the stand in the non-jury trial before Kathaleen McCormick, chief judge of the Delaware Chancery Court.”
The defendants have denied all allegations. In court filings, their lawyers labeled the claims as “extreme”, asserting that Meta had in fact hired an outside consulting firm to ensure compliance with the FTC's rules.
“The evidence at trial will show Facebook hired an outside consulting firm to ensure compliance with the FTC agreement and that Facebook was a victim of Cambridge Analytica’s deceit.”
Moreover, they argue that Meta itself is not a defendant in the case and declined to comment. However, the company claims it has invested billions of dollars in enhancing user privacy since 2019.
In addition to data privacy violations, plaintiffs also accuse Zuckerberg of selling at least $1 billion worth of Facebook shares in anticipation of a stock drop following the Cambridge Analytica revelations.
“Plaintiffs allege that Zuckerberg anticipated that the Cambridge Analytica scandal would send the company’s stock lower and sold his Facebook shares as a result, pocketing at least $1 billion.”
The defense contends that Zuckerberg used a pre-scheduled stock-trading plan that removes executive control over trades, safeguarding against insider trading.
“Defendants said evidence will show that Zuckerberg did not trade on inside information and that he used a stock-trading plan that removes his control over sales and is designed to guard against insider trading.”
This lawsuit is the first of its kind to go to trial that accuses corporate board members of deliberately failing to oversee company operations, a violation often considered the most difficult to prove under Delaware corporate law.
For reference, Boeing’s board settled a similar lawsuit in 2021 for $237.5 million, the largest-ever settlement involving alleged board oversight failure. Notably, Boeing’s board admitted no wrongdoing.
The non-jury trial is expected to continue for several weeks. Chief Judge McCormick is likely to issue a ruling on liability and damages several months after the trial concludes.
The Meta privacy lawsuit not only puts Mark Zuckerberg and other top executives under intense legal scrutiny but could also set a legal precedent for board-level accountability in tech companies. With billions of dollars at stake and major reputations on the line, the trial is being closely watched by regulators, investors, and privacy advocates alike.
Regardless of the outcome, this case underscores the growing demand for stronger oversight in how tech companies manage user data and the legal responsibilities of those at the helm.