The long-awaited trial against Meta Platforms Inc. began this week in Delaware, with shareholders accusing the tech giant of approving a disproportionately large $5 billion settlement with the U.S. Federal Trade Commission (FTC) in 2019. According to the lawsuit, the board of directors breached its fiduciary duty by agreeing to the deal to shield CEO Mark Zuckerberg from personal legal exposure in the Cambridge Analytica privacy scandal.
Zuckerberg’s Role Under the Microscope
At the heart of the case is Zuckerberg's alleged influence over the decision-making process. Investors claim that rather than negotiating a lower fine, Meta’s board, heavily influenced by Zuckerberg, authorized a record-breaking penalty that protected him from being held personally liable. This, according to plaintiffs, resulted in a loss of over $8 billion to the company and its shareholders.
Case Filed in Delaware Chancery Court
The trial is being heard in Delaware’s Court of Chancery, a key venue for corporate disputes. Investors argue that Meta’s board failed to conduct an independent review or push back against the FTC's demands, which they claim undermines corporate governance and fiduciary responsibility. The outcome could impact how tech boards approach regulatory settlements in the future.
Implications Beyond Meta
Legal experts suggest the case could set a precedent for how much influence CEOs can exert over board decisions, especially in high-profile legal settlements. The trial is also being closely watched by other tech firms facing increasing scrutiny over privacy practices and executive accountability.
Meta Maintains Settlement Was Justified
Meta has pushed back, arguing that the $5 billion fine was a necessary and responsible resolution to avoid prolonged litigation and further regulatory action. Company representatives maintain that the board acted in the company’s best interests, balancing legal risk with long-term strategy.