Meta has agreed to pay $725 million to settle a class-action lawsuit alleging the company’s social media site Facebook improperly shared user data with third parties. Facebook, and its parent company Meta, is no stranger to issues with privacy concerns and data sharing allegations, leaving the company scrambling to introduce privacy policy updates to protect user data over the past few years.
According to a CNBC report, the settlement agreement was announced in a court filing. Keller Rohrback L.L.P, the law firm representing the class members in the suit, said the settlement represents the largest monetary compensation ever achieved in a data privacy case and is the most Meta has ever paid out to resolve a class action suit. The legal challenge followed Facebook’s Cambridge Analytica scandal. Whistle-blowers said that Facebook shared user data with the data consulting firm without user consent, which then used the information to assist the presidential campaigns of U.S. Senator Ted Cruz and President Donald Trump. After the fiasco became common knowledge, users, politicians, and government agencies felt Facebook improperly interfered with the results of the 2016 presidential election.
Why Facebook’s Data Sharing Was So Controversial
As part of the settlement agreement, Meta denied any wrongdoing in handling user data and sharing that data with Cambridge Analytica. “We pursued a settlement as it’s in the best interest of our community and shareholders,” a company spokesperson told CNBC. “Over the last three years, we revamped our approach to privacy and implemented a comprehensive privacy program.”
Meta’s proposed settlement agreement is still pending court approval. Since the class action lawsuit was filed in California’s Northern District, judges from that district must review the settlement agreement and give it the green light. Class-action settlement agreements earn court approval without incident most of the time.
Besides the class action settlement, Facebook has agreed to pay $5 billion to the U.S. Federal Trade Commission following the scandal. In response to a similar inquiry, Facebook has also paid $100 million to the U.S. Securities and Exchange Commission. Both cases arose because the company had previously agreed to inform users when their data was being shared with third parties. FTC and SEC findings alleged that Facebook either failed to do so or allegedly used misleading tactics.
Meta has argued that it provides a better user experience with personalized advertisements and tracking and is great for small businesses. But the company shared user data in the 2010s with a consulting firm aiding political campaigns, not with advertising agencies. That prompted worldwide scrutiny, leading to Facebook’s massive $725 million payout to affected class members.
