Facebook parent Meta has agreed to settle a class-action lawsuit over the Cambridge Analytica data harvesting scandal for $725 million, or just under 2.5 days of revenue (based on Q3 figures).
To recap – in 2014, Aleksandr Kogan of Cambridge University in the UK built a Facebook app that paid hundreds of thousands of users to take a psychological test. The app harvested not only the data of the test-taker, but the data of their Facebook friends as well. Kogan sold the resulting database of up to 50 million Americans to Cambridge Analytica, which provided analytical assistance to the 2016 presidential campaigns of Ted Cruz and Donald Trump.
Facebook subsequently banned Cambridge Analytica, and in October 2019 agreed to pay the UK a £500,000 fine for exposing user data to a “serious risk of harm.”
The $725 million settlement is the largest in a US data privacy class action, according to the BBC, citing attorneys.
Meta said the settlement was “in the best interest of our community and shareholders,” adding “We look forward to continuing to build services people love and trust with privacy at the forefront.”
As noted above, the settlement is “not that much” to the tech giant, author James Bell tells the BBC.
“It’s less than a tenth of what it spent on its efforts to create ‘the metaverse’ last year alone,” he said, adding “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.”
The settlement is subject to approval by a federal judge in San Francisco.
“This historic settlement will provide meaningful relief to the class in this complex and novel privacy case,” said lead lawyers Derek Loeser and Lesley Weaver, in a statement.