Will Zuckerberg return to the courtroom? Meta Chief Executive may testify after FTC inquiry

Mark Zuckerberg is on track to endure another round of legal questioning.

Shareholders are seeking to hold Zuckerberg, alongside former Meta COO Sheryl Sandberg and others, accountable for over $8 billion in fines the company has been charged with over privacy conflicts.

The proceedings in Delaware's Court of Chancery are slated to begin on Wednesday.

Earlier this year, Zuckerberg faced probing by Federal Trade Commission prosecutors regarding his internal deliberations prior to Facebook's acquisition of Instagram and WhatsApp. This upcoming trial could prove even more challenging as it revolves around the Cambridge Analytica incident, a distressing episode in Meta's history.

Potential Witnesses and Their Roles

The case might also see appearances from prominent figures in the tech industry due to the shareholders’ assertions concerning Facebook's directors.

Both parties are eager to summon billionaire venture capitalist Marc Andreessen. The shareholders additionally desire testimony from Reed Hastings, co-founder of Netflix. The witness list also includes Peter Thiel, former Biden administration chief of staff Jeff Zients, and eBay's CFO Peggy Alford, with possibilities for in-person or recorded statements. (Note: Thiel and Zients no longer serve on Meta's board.)

Despite not being named as a defendant, Meta refrained from commenting on the legal case.

Allegations of Breached Duties

Shareholders assert that Zuckerberg, Sandberg, and former Vice President Konstantinos Papamiltiadis breached their fiduciary obligations by allegedly ignoring compliance with a Federal Trade Commission directive in 2012, directly leading to the Cambridge Analytica debacle.

Background on the Cambridge Analytica Case

In 2012, the FTC mandated that Facebook must provide users with "clear and conspicuous notice," requiring "explicit consent" for extending data use beyond pre-set privacy settings. Cambridge Analytica acquired data on over 80 million users, thanks largely to Facebook's permission of third-party applications to access users' information, as well as data from their connections.

The shareholders' pretrial briefing also holds Facebook's Board responsible for a decision in 2019 to settle with the FTC for $5 billion following accusations of breaching the FTC order. It argues that directors overlooked significant warnings leading to the Cambridge Analytica scandal.

Legal Ramifications and Reactions

By early 2018, Facebook conceded that data analytics company Cambridge Analytica misappropriated data from tens of millions of users. An estimate by Facebook suggested around 87 million users were implicated. Zuckerberg issued an apology, emphasizing a "responsibility to protect your data."

This triggered international investigations which, in 2019, led to the FTC leveling an unprecedented $5 billion penalty against Facebook as part of a settlement. A subsequent UK parliamentary examination argued that had Facebook adhered to the 2012 decree, the Cambridge Analytica affair could have been thwarted. Shareholders' legal counsel reference this conclusion in their briefing.

Zuckerberg's defense team contends that there exists "no evidence" of any legal transgressions by Meta’s Chief Executive.

They argue, "This and similar evidence also challenge plaintiffs' portrayal of a company apathetic towards compliance," as noted in a recent legal submission.

Previously, Reuters reported that dismissal of the case was unsuccessful for the defendants two years ago.

Wider Implications of the Trial

This trial, which will be non-jury based, will be overseen by Chancellor Kathaleen McCormick. She is known for nullifying Elon Musk's compensation package at Tesla.

Her judgments concerning Musk have generated discontent within the tech sector towards Delaware's Court of Chancery, historically regarded as the go-to for business claims in the incorporation-dominant state.

Since then, several major entities, including Andreessen Horowitz, Roblox, and Pershing Square Capital Management, have either migrated or signaled an intention to leave Delaware.