Facebook paid nearly $5 billion for the FTC to ‘protect Zuckerberg’ after Cambridge Analytica scandal

Facebook overpaid the Federal Trade Commission by nearly $5 billion in an alleged “quid pro quo” to protect CEO Mark Zuckerberg from being sued individually by the agency, shareholders claim in a lawsuit made public Tuesday.

The multi-billion-dollar fine was paid in addition to a $106 million settlement after Facebook failed to warn investors about the Cambridge Analytica data collection, considered the biggest scandal in Facebook’s history.

“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 suit, first reported by Politico, says.

The FTC declined to comment. Facebook did not immediately respond to Insider’s request for comment.

In the lawsuit’s introduction, shareholders allege “Zuckerberg has methodically stacked the Board with friends, cronies, and employees. When directors have summoned the courage to stand up or speak out, Zuckerberg has pushed them out.”

“Unsurprisingly, the Board has never provided a serious check on Zuckerberg’s unfettered authority,” the suit continues. “Instead, it has enabled him, defended him, and paid billions of dollars from Facebook’s corporate coffers to make his problems go away.”

In early 2018, Facebook admitted to mishandling data from over 50 million Facebook users which had been improperly obtained by political data-analytics firm Cambridge Analytica, Insider’s Alexandra Ma and Ben Gilbert reported.

By just a few months later, that number had risen considerably — somewhere in the range of 87 million Facebook users were actually impacted. Facebook apologized, CEO Mark Zuckerberg went in front of Congress to answer questions, and the FTC slapped Facebook with a historically large fine — $5 billion.

One set of shareholders, including Plaintiffs “Employees’ Retirement System of Rhode Island” and “City of Warwick Retirement System,” first filed the claims regarding the $5 billion fine’s implications last year. After the complaints were amended with new information last month, the lawsuits became public on Tuesday via trade association Digital Content Next’s CEO, Jason Kint.

Source: businessinsider.com
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