Facebook shareholders have reportedly alleged that the social media giant overpaid $5 billion (roughly Rs. 36,928 crores) to the American antitrust watchdog to protect CEO Mark Zuckerberg from personal liability related to the Cambridge Analytica data leak probe. The shareholders said to have alleged in two lawsuits, which were filed last month but made public on Tuesday, that Facebook's board allowed the company to pay extra on top of the fine sought by the Federal Trade Commission (FTC) in 2019. The lawsuits, reportedly filed in Delaware, cite internal discussions among the board members. Cambridge Analytica, a political consulting firm, is said to have improperly obtained personal data of 87 million Facebook users for advertising during the 2016 US Presidential elections.
In a long Twitter thread, Jason Kint, the Chief Executive Officer of Digital Content Next, a trade group for digital content producers, outlined the major points of the lawsuits that together run over 600 pages. He called it the "mother of all lawsuits".
!!! news. mother of all lawsuits quietly filed last month vs Facebook in Delaware. I'll explain why it avoided notice until now in a bit but Zuckerberg, Sandberg, CFO, board inc Peter Thiel and Palantir are defendants - it's a result of sealed docs between FB execs and board. /1 pic.twitter.com/FSWtV8T8MG— Jason Kint (@jason_kint) September 21, 2021
He primarily outlined four plaintiff allegations, which included Facebook spending billions to protect Zuckerberg personally and that the CEO misled the US Congress while appearing before it in connection with the Cambridge Analytica probe in April 2018.
Major new plaintiff allegations - many long concerning:— Jason Kint (@jason_kint) September 21, 2021
1 FB spent billions to protect Zuckerberg personally
2 claims "epic corporate governance breakdown"
3 adds list of "insider trading" defendants
4 documents Zuckerberg misled Congress /2 pic.twitter.com/XyKkLu82K4
The FTC began investigating Facebook in 2018, focusing on whether the company violated a legal agreement it had with the US government to keep its users' data private.
The central allegation kicking this off is the FTC's draft settlement named Zuckerberg personally which would have caused all sorts of issues for him. The board, entirely controlled by Zuckerberg, refused and paid $5B to protect him so FTC didn't name him personally. /5 pic.twitter.com/Xu9l5sBF2v— Jason Kint (@jason_kint) September 21, 2021
The complaints say the defendants, who include Facebook COO Sheryl Sandberg, were aware of the threat Facebook's “illegal course of conduct” posed to the company, which was akin to an “epic governance failure”.
The allegations in this new derivative lawsuit upon seeing the board docs is that all of this is a result of the lawsuit calls an "epic governance failure," more on that in a minute. /6 pic.twitter.com/zJ8l94GDzL— Jason Kint (@jason_kint) September 21, 2021
On Insider trading allegations, Kint said they relate to hundreds of millions to billions made by insiders who would have been aware or neglected their governance duties.
The "Insider Trading" allegations relate and document the hundreds of millions to billions made by insiders who would have been aware or neglected their governance duties as documents and risks were filed with SEC making *actual* harms realized read like *hypothetical* risk. /25 pic.twitter.com/uieTVU0aWX— Jason Kint (@jason_kint) September 21, 2021
Concluding the tread, the DCN chief said that everyone reading the posts should keep in mind that these are plaintiffs' claims.
I see this is taking off so a reminder to everyone this is the plaintiffs' claims. But it does bring together an enormous amount -and- they decided to file after inspecting board docs. Everything was from the 2nd complaint, there is also the Rhode Island suit filed same day.— Jason Kint (@jason_kint) September 21, 2021
The Twitter thread specifically points out an allegation the Facebook shareholders have made in the lawsuits that Zuckerberg, during his testimony before the US Congress, claimed Facebook doesn't collect data from other apps. Kint said, “It (the lawsuit) doesn't mince words. ‘The Zuckerberg testimony quoted in the immediately preceding paragraph is materially false and misleading'.”
On the same day the FTC settlement was announced, the Securities and Exchange Commission announced it would fine Facebook $100 million (roughly Rs. 7.38 crores) as part of a settlement.