Zuckerberg Faces Lawsuit Involving Cambridge Analytica

On Monday, May 23, CEO Mark Zuckerberg of Facebook parent company Meta Platforms, Inc, (FB) was hit with a new lawsuit over the Cambridge Analytica scandal. In the suit, Washington D.C. Attorney General Karl A. Racine, alleges was Zuckerberg directly contributed to the "decision-making that allowed the Cambridge Analytica data breach."

In the filing, Racine's office also alleged that in the run-up to the 2016 Presidential election, of the 87 million Facebook users affected were half the district's residents. Still ongoing is a another suit filed by Racine in 2018 against the company over its data practices. Racine attempted to have Zuckerberg named as a defendant in the 2018 suit, but a judge denied the motion earlier in 2022.

In a press release, Racine stated: "Mr. Zuckerberg was personally involved in Facebook’s failure to protect the privacy and data of its users leading directly to the Cambridge Analytica incident .... Mr. Zuckerberg’s policies enabled a multi-year effort to mislead users about the extent of Facebook’s wrongful conduct. This lawsuit is not only warranted, but necessary, and sends a message that corporate leaders, including CEOs, will be held accountable for their actions."

The Cambridge Analytica Scandal

Cambridge Analytica was a U.K.-based political consulting company that tried to use personal data from about 87 million Facebook users to influence their political decisions. For the vast majority of these users, their personal data were shared with the firm without their prior knowledge or consent.

Fallout From Cambridge Analytica

Cambridge Analytica ceased operations in 2018, and Facebook has endured various government investigations in both the U.S. and the U.K. In 2019, Facebook paid a fine of 500,000 British pounds sterling (GBP), then equivalent to about $643,000, to U.K. authorities and reached a record-breaking $5 billion settlement with the Federal Trade Commission (FTC).

In 2018, the social media giant also announced new data privacy measures, including restricting the ability of third-party apps to access the pages and personal information of users, and disabling a feature that enabled users to search or recover an account by using simply a phone number or an email address.

Zuckerberg's Direct Oversight

Racine's office has conducted a wide range of depositions with Facebook’s directors, former employees, and whistleblowers; examined hours of Zuckerberg’s public statements, including sworn testimony before the U.S. Senate and law enforcement agencies. It finds that Zuckerberg exercised direct oversight of major decisions that allowed the mass collection of Facebook user data by Cambridge Analytica and other third parties, as well as Facebook’s misrepresentations about the security of personal information.

The suit also asserts that Zuckerberg exercises close control over Facebook's daily operations. It also notes that he holds 60% of the voting shares.

The formal complaint seeks as-yet unspecified amounts of restitution, damages, and civil penalties from Zuckerberg for violations of D.C.'s Consumer Protection Procedures Act (CPPA), and other consumer protection laws. It also seeks recovery of its own legal costs from him.

The Bottom Line

Facebook CEO Mark Zuckerberg was sued by the Washington, D.C. attorney general for his role in allowing the Cambridge Analytica data breach to occur. which exposed the data of approximately 87 million people. As of the close of markets on Tuesday May 24, 2022, shares of Meta are down -4.6% from their Friday close.