Pass the Popcorn

Pass the Popcorn

A group of Facebook shareholders have filed a lawsuit against the social media giant, claiming that they overpaid the FTC to protect Mark Zuckerberg, which is not in the best interest of those shareholders.

Even though Zuckerberg holds a controlling interest in the company, this does not exempt him, or other officers of Facebook, from acting in the best interest of the company.

I don't think that they will prevail, but discovery should prove prove very interesting:

In a newly unsealed lawsuit, Facebook shareholders allege that the company intentionally overpaid a $5 billion Federal Trade Commission fine to protect CEO Mark Zuckerberg from further government scrutiny.

"Zuckerberg, Sandberg, and other Facebook directors agreed to authorize a multi-billion settlement with the FTC 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 lawsuit says (emphasis in the original). An early draft of the order obtained by The Washington Post through the Freedom of Information Act shows that the commission was considering holding Zuckerberg responsible.

The FTC levied the fine in July 2019 in the wake of the Cambridge Analytica scandal, which saw political operatives harvesting the personal data of 50 million Facebook users without their consent. (The lawsuit says only 0.31 percent of the affected users consented.) The fine (which was a record for privacy-related penalties) was 50 times larger than the maximum prescribed by a previous FTC consent decree, the lawsuit alleges. It was also well in excess of the previous record fine of $168 million.

"Facebook's maximum monetary exposure was $104,751,390—about $4.9 billion less than it agreed to pay," shareholders said in the lawsuit. The overpayment, they said, is a breach of fiduciary duty.

………

The shareholders filed the lawsuit in Delaware's Court of Chancery. Among the plaintiffs are a handful of pension and retirement funds, including the massive California State Teachers' Retirement System, which manages over $250 billion. The defendants include Mark Zuckerberg, Facebook COO Sheryl Sandberg, several other executives, and members of the board at the time of the settlement, including Peter Thiel, Mark Andreessen, and Jan Koum, among others.

A second lawsuit, which has been consolidated with the first, also names Palantir Technologies, Thiel's big data analytics firm. That lawsuit alleges tight ties between Palantir and Cambridge Analytica, citing a 2019 book by whistleblower Christopher Wylie. Wylie reported that several Palantir employees, including one of the company's lead data scientists, routinely worked at Cambridge Analytica's offices "in person, during normal business hours," the lawsuit says. "The two companies were so intertwined that, as the Stanford Daily reported in April 2018, Palantir earned itself the moniker 'Stanford Analytica.'" Palantir reportedly took steps to obscure the relationship.

As a bonus, the worst man in Silicon Valley is involved too.

When the rocks get turned over at Facebook, it's going to be very interesting.