Meta Agrees to Pay $725 Million in Settlement of Cambridge Analytica Lawsuit

Facebook's parent company, Meta, is down 2.20%.

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Platforms Inc. has agreed to pay $725 million to settle a lawsuit that accused the company of allowing Cambridge Analytica and other third parties to access private information about millions of users. This is a huge victory for the plaintiffs, who argued that the company's actions violated their privacy rights.

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The proposed settlement would fund payouts to U.S.-based users of Facebook, in what plaintiffs say could be the largest U.S. class-action privacy settlement ever. This is according to a court filing that was made late Thursday. Meta and the other party involved in the case agreed in principle to settle in August, but no financial details were disclosed. A final agreement was reached on Thursday, and now awaits approval by the court, according to the court filing.

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A Meta spokesman said Friday that the settlement is "in the best interest of our community and shareholders." The company said that it has in the past three years revamped its approach to privacy and "implemented a comprehensive privacy program."

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The suit was filed in response to revelations that Cambridge Analytica, a now-defunct British consulting firm, had improperly obtained and exploited data from Facebook users. Meta later disclosed that data from around 87 million Facebook users may have been affected, including more than 70 million in the U.S.
After the incident, Meta (now known as Facebook) agreed to pay fines in the U.S. and U.K. In 2019, it also made changes to its privacy practices under a $5 billion settlement with the U.S. Federal Trade Commission.

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As part of the FTC agreement, Meta implemented new oversight of data practices and agreements, including a restructuring of its board of directors to boost oversight of privacy practices. The FTC investigation centered on whether Cambridge Analytica’s access to information violated a 2012 consent decree with the agency. Under the terms of the agreement, Meta had agreed to better protect user privacy.

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After the allegations surrounding Facebook data, Cambridge Analytica shut down. The company had won political-consulting work in the U.S. by offering to use data to profile and influence voters with political messages that took advantage of their deepest fears and desires. However, some former clients of the company said it had struggled to make good on its bold claims.