January 27, 2023

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Meta agrees to pay $725 million to settle Cambridge Analytica case

Meta has agreed to pay $725 million to settle a class action lawsuit alleging that the social media giant, which owns Facebook, Instagram and WhatsApp, allowed third parties access to users’ personal information.

The proposed amount would be the largest settlement reached in a U.S. privacy class action lawsuit and the largest sum Meta has ever paid out in a lawsuit, according to a court filing released Thursday.

The long-running case was sparked by the Cambridge Analytica scandal in 2018, when a company whistleblower revealed that Facebook allowed the British political consultancy to access the personal data of up to 87 million users. However, the class action lawsuit expanded jurisdiction to include other third parties who may have made inappropriate uses of Facebook data.

Meta’s settlement, which admits no wrongdoing, comes as the company is hit by the slowest revenue growth since its IPO, amid stiff competition from social media rivals and a slump in digital advertising.

Last month, the social network led by Chief Executive Mark Zuckerberg cut 11,000 employees, about 13 percent of its workforce, as part of cost-cutting measures and recently reduced office space in the UK and US.

The class action lawsuit alleged that the company allowed app developers and business partners to access users’ data without their consent. The estimated number of people affected by the case ranges from 250 to 280 million people and represents all US Facebook users between 2007 and 2022, the filing said.

Meta said it has revamped its approach to privacy over the past three years. “We have sought a settlement as it is in the best interests of our community and our shareholders,” it added in a statement.

Digital rights activists and whistleblowers previously accused Cambridge Analytica of using collected personal data to influence the results of the UK’s EU referendum and the 2016 US presidential election and of violating campaign rules.

Meta paid a £500,000 fine to UK data regulator Cambridge Analytica, which found no evidence it misused data to influence the Brexit referendum or support Russian intervention in political processes, but that it failed to do so to protect personal information from its users.

The tech giant has also paid $5 billion to settle a US Federal Trade Commission investigation into meta-privacy practices and $100 million to settle a US Securities and Exchange Commission investigation into claims it had investors over the Misuse of user data misled.

Several investigations by US state attorneys general are ongoing.