By Arjun Kharpal -
CNBC News
Meta, the parent company of Facebook, has agreed to pay $725 million to settle a class action lawsuit alleging that the social networking giant gave third parties access to user data without their consent.
It's the "largest recovery ever made in a data privacy class action lawsuit and the most Facebook has paid to settle a private class action lawsuit," Keller Rohrback LLP, the law firm representing the plaintiffs, said in a court filing. late Thursday announcing the deal.
The action was prompted in 2018 after Facebook revealed that the information of 87 million users was improperly shared with Cambridge Analytica, a consultancy linked to the 2016 election campaign of former President Donald Trump.
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The case was expanded to focus on Facebook's general data sharing practices.
The plaintiffs alleged that Facebook "gave multiple third parties access to your content and information without your consent, and that it failed to adequately monitor their access to and use of that information," according to the law firm behind the lawsuit.
Judges overseeing the case in the Northern District of California will have to approve the settlement.
“It is the best for our community and our shareholders.
In the last three years we have renewed our approach to privacy and have implemented a comprehensive security program,” a Meta spokesperson told CNBC.
As part of the agreement, the company did not admit to committing any wrongdoing.
A scandal that sparked worldwide outrage
The Cambridge Analytica scandal sparked global outrage and a series of regulators scrutinizing Facebook's data practices.
Following the revelations, the US Federal Trade Commission (FTC) opened an investigation over concerns that the social media 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.
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In 2019, Facebook settled a record $5 billion payout with the FTC.
It also agreed to shell out $100 million to settle a case, around the same time, with the Securities and Exchange Commission over allegations that the company made misleading disclosures about the risk of misuse of user data.
Facebook changed its name to Meta to reflect its growing ambitions to become the leader of the metaverse.SOPA Images / SOPA Images/LightRocket via Gett
Cambridge Analytica, which closed following the allegations in 2018, was controversial because the data it collected from Facebook was used to advise political campaigns.
That year, Britain's Channel 4 News filmed Cambridge Analytica executives suggesting that the company use sex workers, bribery, ex-spies and fake news to help candidates win votes around the world.
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Following the scandal, Facebook changed its name to Meta to reflect its growing ambitions to become the leader of the metaverse, a term used to refer to virtual worlds.
Facebook, still one of the world's largest social networks, is run by Meta, but has seen its growth slow due to a slowdown in the advertising market, changes to Apple's privacy rules for iOS, and increasing competition from TikTok. .
