Meta Will Pay $725 Million to Settle Cambridge Analytica Class-Action Lawsuit

The parent company of Facebook, Meta, has agreed to pay $725 million to resolve a class action lawsuit alleging that the platform provided user data to third parties without their permission, as reported first by CNBC.

Largest Recovery in a Data Privacy Class Action

According to Keller Rohrback L.L.P, the plaintiff's legal team, the settlement is the largest recovery ever reached in a data privacy class action and the highest amount Facebook has ever paid to settle such a class action.

Following Facebook's admission that 87 million users' data had been inappropriately shared with Cambridge Analytica, a consultancy affiliated with the 2016 presidential campaign of US President Donald Trump - the class action lawsuit was immediately lodged.

The scope of the action was also expanded to include Facebook's entire data-sharing policies.

According to the legal firm behind the case, the plaintiffs claimed that Facebook gave various third parties access to their Facebook content and information without their permission and that the platform failed to appropriately supervise the third parties access to and use of that information.

Judges in the Northern District of California in charge of the are now tasked to signal the green light for the settlement.

A representative for Meta told CNBC that during the past three years, they completely overhauled their privacy strategy and put in place a robust privacy program, adding that the settlement was in the best interest of the company and its shareholders.

Cambridge Analytica Scandal

The Cambridge Analytica incident led a wave of regulators to scrutinize Facebook's data policies.

Following the disclosures, the US Federal Trade Commission launched an investigation into Facebook due to suspicions that the social media company had broken the terms of an earlier agreement with the organization, which required it to clearly notify users when their data was distributed to third parties.

In 2019, Facebook and the FTC reached a $5 billion settlement. Additionally, the company consented to pay $100 million to resolve claims that it misled investors about the danger of user data misuse in a dispute with the US Securities and Exchange Commission.

After the controversy, Facebook changed its name to Meta to better reflect its expanding aspirations to become a dominant force in the Metaverse, a phrase used to describe virtual worlds.