Facebook’s parent company, Meta, has consented to pay a settlement of $725 million over a massive user data breach that was linked to the British consultancy firm, Cambridge Analytica. In a class action lawsuit filed against the company, plaintiffs contended that Meta allowed third parties to access personal data without user authorization.
Meta also agreed that the personal data of 87 million users were leaked to Cambridge Analytica in 2018 – a scandal that caused Facebook to switch its name to Meta as a parent company overseeing Instagram, WhatsApp, and Facebook among other social media properties. Meta is short for metaverse, a term referring to virtual worlds.
Meta did not expressly agree that it was culpable for granting user access to third parties without user consent, but it stated that the $725 million settlement was necessary to building and sustaining trust in its global online community.
“We pursued a settlement as it’s in the best interest of our community and shareholders,” a Meta spokesperson said. “Over the last three years, we revamped our approach to privacy and implemented a comprehensive privacy program. We look forward to continuing to build services people love and trust with privacy at the forefront.”
In 2019, the Federal Trade Commission (FTC) initiated inquiries into whether Facebook violated the conditions of a previous pact with the FTC where it was agreed that Facebook must notify users before their data was shared with third parties. Facebook, in that year, consented to pay a settlement of $5 billion to the FTC, and another $100 million to the Securities and Exchange Commission (SEC) accused the social media company of providing false declarations about the rise of user data misuse.
The scandal ultimately was too much for Cambridge Analytica in 2018, and given that the consultancy firm had been linked to former President Donald Trump and his political campaigns, other inquiries fingered the consultancy in using user data, espionage, fake news, sex workers, and even bribes to enable targeted contenders to win political votes around the world. This situation led Cambridge Analytica to close down permanently that year.
Tech analysts believe the $725 million class action settlement Meta agreed to pay is very little compared to the financial worth of the company.
“It’s less than a tenth of what it spent on its efforts to create ‘the metaverse’ last year alone,” said James Ball, a tech author. “So Meta probably won’t be too unhappy with this deal, but it does stand as a warning to social media companies that mistakes can prove very costly indeed.”
In the UK, the UK Competition Appeal Tribunal is also working on a multi-billion dollar class action lawsuit against Meta in relation to the Cambridge Analytica data leak.