Facebook Meta parent agrees to pay $725 million to settle privacy lawsuit

Facebook parent meta It has agreed to pay $725 million to settle a class action lawsuit that alleged that the social media giant gave third parties access to user data without their consent.

Keller Rohrback LLP, the law firm representing the plaintiffs, said in a court filing late Thursday announcing the settlement that it is “the largest recovery ever achieved in a data privacy class action and the most Facebook has ever paid to resolve a private class action.” .

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The class action lawsuit was filed in 2018 after Facebook revealed that information of 87 million users was improperly shared with Cambridge Analytica, a consulting firm linked to former President Donald Trump’s 2016 election campaign.

The case has been expanded to focus on Facebook’s blanket data sharing practices. The plaintiffs alleged that Facebook “gave multiple third parties access to their Facebook content and information without their consent, and that Facebook failed to monitor the third parties’ access to and use of this information,” according to the law firm behind the suit. .

The judges overseeing the case in the Northern District of California will now have to agree to the settlement.

“We sought a settlement because it is in the best interest of our community and our shareholders. Over the past three years, we have revamped our approach to privacy and have implemented a comprehensive privacy program,” a spokesperson for Meta told CNBC. The company did not admit any wrongdoing as part of the settlement.

The Cambridge Analytica scandal has sparked global outrage and an outburst from regulators around the world to scrutinize Facebook’s data practices.

After the information was revealed, the US Federal Trade Commission opened an investigation into Facebook over concerns that the social media company had violated the terms of a previous agreement with the agency, which required it to give users clear notices when their data was shared with third parties. .

In 2019, Facebook agreed to a record $5 billion settlement with the Federal Trade Commission. Facebook also agreed to pay $100 million to settle a case around the same time with the US Securities and Exchange Commission over allegations that the company made misleading disclosures about the risks of misuse of user data.

Cambridge Analytica, which shut down after the allegations in 2018, was controversial because the data it collected from Facebook was used to inform political campaigns.

In 2018, Britain’s Channel 4 News filmed Cambridge Analytica executives suggesting that the company would use sex workers, bribes, ex-spies and fake news to help candidates win votes around the world.

Since the scandal, Facebook has changed its name to Meta to reflect its growing ambitions to become a leader in the metaverse, a term used for virtual worlds. Facebook, still one of the largest social media companies in the world, is run by Meta.

But Facebook has seen growth slow due to a slowdown in the ad market, changes to Apple’s privacy rules for iOS, and increased competition from TikTok.