Facebook CEO Mark Zuckerberg standing in front of a sign that says 'privacy.'

Anthony Quintano/Flickr (CC-BY)

Facebook allegedly overpaid government fines to protect Zuckerberg from liability

The suit calls the overpay an 'express quid pro quo'

 

Andrew Wyrich

Tech

Published Sep 22, 2021   Updated Sep 22, 2021, 11:27 am CDT

Facebook paid billions more in fines as part of a 2019 Federal Trade Commission (FTC) settlement to shield CEO Mark Zuckerberg from personal liability, two lawsuits allege.

The lawsuits, which were first reported on by Politico, were filed by shareholders in Delaware Court of Chancery and recently were made public. They claim Facebook’s board overpaid in the settlement to protect Zuckerberg.

The FTC investigated Facebook in the wake of the Cambridge Analytica scandal, where tens of millions of Facebook users had their information unknowingly harvested by the data firm. It announced in 2019 that Facebook faced a $5 billion fine.

In February 2019, the FTC sent Facebook’s outside counsel a copy of a complaint that named both Facebook and Zuckerberg as defendants, according to one of the lawsuits.

However, the suit also alleges that Zuckerberg and COO Sheryl Sandberg agreed to the FTC settlement as “an express quid pro quo to protect Zuckerberg from being named in the FTC’s complaint, made subject to personal liability, or even required to sit for a deposition.”

The suit also alleges that Facebook’s maximum monetary exposure was around $104 million, much higher than the eventual $5 billion agreement.

At the time, the FTC’s two Democratic commissioners voted against the settlement, in part because they felt the penalty was too low and that Zuckerberg wasn’t personally liable.

Commissioner Rohit Chopra noted in his dissenting statement to the settlement that “the grant of immunity for Facebook’s officers and directors is a giveaway.” Commissioner Rebecca Kelly Slaughter felt similarly, writing that the order releasing Facebook’s officers from legal liability was “far too broad.”


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*First Published: Sep 22, 2021, 11:02 am CDT