Facebook’s parent company, Meta, has agreed to pay $725 million to settle a class action lawsuit that alleged the social networking giant allowed third parties to access users’ data without their consent.
It’s the « largest recovery ever obtained in a data privacy class action and the most Facebook has ever paid to resolve a private class action, » Keller Rohrback L.L.P, the law firm representing the plaintiffs, said in a court filing Thursday announcing the settlement.
The class action lawsuit was triggered in 2018 after Facebook revealed that the information of 87 million users was improperly shared with Cambridge Analytica, a consulting firm linked to former President Donald Trump’s 2016 election campaign.
Judges overseeing the case in the Northern District of California will now have to approve the settlement.
« We sought a settlement because it is in the best interest of our community and our shareholders. Over the past three years, we have revamped our approach to privacy and implemented a comprehensive privacy program, » a Meta spokesperson told CNBC. The company has not admitted any wrongdoing in the settlement.
The Cambridge Analytica scandal sparked global outrage and an avalanche of regulators around the world to scrutinize Facebook’s data practices.
After the revelations, the U.S. Federal Trade Commission opened an investigation into Facebook over concerns that the company had violated the terms of a previous agreement with the agency, which required it to give users clear notifications when their data was shared with third parties.
In 2019, Facebook agreed to a record $5 billion settlement with the FTC. Facebook also agreed to pay $100 million to settle a case around the same time with the U.S. Securities and Exchange Commission over allegations that the company made misleading statements about the potential for misuse of user data.
Cambridge Analytica, which shut down after the allegations in 2018, was controversial because the data it harvested from Facebook was used to inform political campaigns.
In 2018, Britain’s Channel 4 News filmed Cambridge Analytica executives suggesting the firm would use bribes, ex-spies, fake news, etc. to help candidates win votes around the world.
Since the scandal, Facebook has changed its name to Meta to reflect its growing ambitions to become a leader in the metaverse.
But Facebook has seen its growth slow due to a slowdown in the advertising market, changes in Apple’s iOS privacy rules and growing competition from TikTok.