Beautiful Virgin Islands

Wednesday, Aug 27, 2025

Mother of all lawsuits quietly filed last month vs Facebook in Delaware

Zuckerberg, Sandberg, CFO, board inc Peter Thiel and Palantir are defendants - it's a result of sealed docs between FB execs and board.
Major new plaintiff allegations - many long concerning:

1. FB spent billions to protect Zuckerberg personally

2. Claims "epic corporate governance breakdown"

3. Adds list of "insider trading" defendants

4. Documents Zuckerberg misled Congress

It's a whopping 390 pages and there is a related 220 page suit filed in same court on the same day.

Together they bring the kitchen sink on allegations as to how the platform gained market power, failed its 2012 FTC Consent Decree, covered-up and failed to disclose data harms.

As background, State of Rhode Island originally had sued Facebook claiming it WAY overpaid FTC by as much as $4.9B to protect Zuckerberg. It won rights to inspect a lot of docs from 2013-2019 leading to this new lawsuit which draws on a ton of evidence from all over the place.

The central allegation kicking this off is the FTC's draft settlement named Zuckerberg personally which would have caused all sorts of issues for him. The board, entirely controlled by Zuckerberg, refused and paid $5B to protect him so FTC didn't name him personally.

The allegations in this new derivative lawsuit upon seeing the board docs is that all of this is a result of the lawsuit calls an "epic governance failure," more on that in a minute.

Original suit of course was filed due to Cambridge Analytica. New lawsuit has more details than anything I've seen (many sealed). Reminder, case centers on millions of stolen and sold Facebook users' data. According to suit, only .31% had consented to it being shared.

As Zuckerberg's close buddy, Bosworth, helped broadcast at the time - Facebook claimed it wasn't a "breach" or "hack" because the systems were designed and known to work the way they did. The platform was the hack. But of course, a reminder, Facebook doesn't sell your data.

As we learned in earlier discovery from Attorney General of DC combined with pressure and hearings from the UK, employees knew about Cambridge Analytica. They called it "sketchy" even before Guardian brought their attention to it.

AOC famously asked about the knowledge and awareness in a hearing in late 2019 causing Zuckerberg appeared to stumble on his answer to keep his story straight.

And it was politically sensitive. A Fall 2020 Channel 4 News documentary even reported and uncovered more details on how the data was used for voter suppression and microtargeting in key battleground states. But that's for a different thread.

This lawsuit even includes the fact Facebook hired one of the co-founders of the company that mined and sold the Facebook data to Cambridge Analytica at a sensitive time. His entire tenure and existence is still a deep mystery in all of this but good to see in the lawsuit.

This lawsuit isn't about politics but instead antitrust, governance and SEC-related failures. A reminder to the antitrust matters: one core allegation is Facebook accelerated its shift to mobile leveraging data reciprocity deals. It's very much in here, too.

We know this from previously unsealed emails and messages which showed the constructs of cutting off data feeds to apps that were seen as competitive threats or weren't willing to provide revenues for Facebook. Again, ladies and gentlemen, they didn't sell your data.

A hat tip at this point to UK Parliament, specifically MP Damian Collins, who really led the world in uncovering as much of the details here either through accountability pressure and leaked docs as they tried to get Facebook leadership to answer questions at hearings.

There is a lot in the lawsuit around Facebook's failure to honor its 2012 Consent Decree. This includes sealed sections that at least appear to suggest the board and leadership never even reviewed required PWC audits or connected any dots to Cambridge Analytica.

Speaking of PWC, this is new to me. It appears they did an investigation in 2019 after everything hit the fan for Facebook but their engagement was ended before the report was finalized. (note, 220 docs are board materials turned over as part of original suit).

Of course, Zuckerberg's control of the board is not new and is drawn on the separate class of stock (negotiated with assistance by current board member, Marc Andreessen), he controls voting power. He even controls the Nominating Committee to the board among allies.

The lawsuit allegations claim this results in a board where directors are ousted regularly and are mostly in some way conflicted in their relationships to the leadership or the company. These is a lot of pages on this issue.

Lawsuit also claims, "Congress Calls Defendant Zuckerberg To Question And Is Met With Dishonesty" regarding false or misleading answers to Congress. I've documented these concerns in threads previously but good to see claims going before a court.

In testimony, Zuckerberg regularly claimed users maintain control over their data - there are several pages of examples in the lawsuit. However, NYT reported Facebook was actually whitelisting companies to still receive user data through and after his testimony.

Zuckerberg and Facebook also made a big deal how they reacted quickly in Dec 11, 2015 when they found out - supposedly from press reports - what Cambridge Analytica was doing including implying they scrambled to get legal certification the data was deleted. Not so much.

Another allegation in the lawsuit of misleading testimony is Zuckerberg suggesting Facebook doesn't collect data from other apps. It doesn't mince words.

"The Zuckerberg testimony quoted in the immediately preceding paragraph is materially false and misleading."

Lawsuit expands further with research that "61% of apps...automatically transfer data to Facebook" upon launch. Yes, that's why Facebook is freaking out about Apple's new privacy rules which kneecap Facebook's surveillance ads business (which continues to thrive on Android).

The "Insider Trading" allegations relate and document the hundreds of millions to billions made by insiders who would have been aware or neglected their governance duties as documents and risks were filed with SEC making *actual* harms realized read like *hypothetical* risk.

And of course, the lawsuit even catches up to reports in 2021 noting the lack of change in Facebook attitude as they treated news in April 2021 of 530 million records being exposed as an issue only if the press volume didn't continue to decline. PR also confused press on it.

Final point, the lawsuit asks for this in relief but I would also note there is a lot of sealed board docs. The Attorney General of DC is also deep into discovery and depositions (hearing next Tue 9/28 @ 2:30pm) in much-related case.

Someone needs to wake up the SEC, though.

As to how this suit wasn't noticed, Delaware Chancery charges a fortune per document limiting public awareness. Original case to inspect board docs (Rhode Island) was won, derivative suits were amended/filed/consolidated in shell game. I followed the breadcrumbs. Voila.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Manhunt in Australia: Armed Anti-Government Suspect Kills Police Officers Sent to Arrest Him
China Launches World’s Most Powerful Neutrino Detector
How Beijing-Linked Networks Shape Elections in New York City
Ukrainian Refugee Iryna Zarutska Fled War To US, Stabbed To Death
Elon Musk Sues Apple and OpenAI Over Alleged App Store Monopoly
2 Australian Police Shot Dead In Encounter In Rural Victoria State
Vietnam Evacuates Hundreds of Thousands as Typhoon Kajiki Strikes; China’s Sanya Shuts Down
UK Government Delays Decision on China’s Proposed London Embassy Amid Concerns Over Redacted Plans
A 150-Year Tradition to Be Abolished? Uproar Over the Popular Central Park Attraction
A new faith called Robotheism claims artificial intelligence isn’t just smart but actually God itself
Deputy Prime Minister Angela Rayner Purchases Third Property Amid Housing Tax Reforms Debate
HSBC Switzerland Ends Relationships with Over 1,000 Clients from Saudi Arabia, Lebanon, Qatar, and Egypt
Sharia Law Made Legally Binding in Austria Despite Warnings Over 'Incompatible' Values
Italian Facebook Group Sharing Intimate Images Without Consent Shut Down Amid Police Investigation
Dutch Foreign Minister Resigns Amid Deadlock Over Israel Sanctions
Trump and Allies Send Messages of Support to Ukraine on Independence Day Amid Ongoing Conflict
China Reels as Telegram Chat Group Shares Hidden-Camera Footage of Women and Children
Sam Nicoresti becomes first transgender comedian to win Edinburgh Comedy Award
Builders uncover historic human remains in Lancashire house renovation
Australia Wants to Tax Your Empty Bedrooms
MotoGP Cameraman Narrowly Avoids Pedro Acosta Crash at Hungarian Grand Prix
FBI Investigates John Bolton Over Classified Documents in High-Profile Raids
Report reveals OpenAI pitched national ChatGPT Plus subscription to UK ministers
Labour set to freeze income tax thresholds in long-term 'stealth' tax raid
Coca‑Cola explores sale of Costa coffee chain
Trial hears dog walker was chased and fatally stabbed by trio
Restaurateur resigns from government hospitality council over tax criticism
Spanish City funfair shut after serious ride injury
Suspected arson at Ilford restaurant leaves three in critical condition
Tottenham beat Manchester City to go top of Premier League
Bank holiday heatwave to hit 30°C before remnants of Hurricane Erin arrive
UK to deploy immigration advisers to West Africa to block fake visas
Nurse who raped woman continued working for a year despite police alert
Drought forces closures of England’s canal routes, canceling boat holidays
Sweet tooth scents: food-inspired perfumes surge as weight-loss drugs suppress appetites
Experts warn Britain dangerously reliant on imported food
Family of Notting Hill Carnival murder victim call event unmanageable
Bunkers, Billions and Apocalypse: The Secret Compounds of Zuckerberg and the Tech Giants
Ukraine Declares De Facto War on Hungary and Slovakia with Terror Drone Strikes on Their Gas Lifeline
Animated K-pop Musical ‘KPop Demon Hunters’ Becomes Netflix’s Most-Watched Original Animated Film
New York Appeals Court Voids Nearly $500 Million Civil Fraud Penalty Against Trump While Upholding Fraud Liability
Elon Musk tweeted, “Europe is dying”
Far-Right Activist Convicted of Incitement Changes Gender and Demands: "Send Me to a Women’s Prison" | The Storm in Germany
Hungary Criticizes Ukraine: "Violating Our Sovereignty"
Will this be the first country to return to negative interest rates?
Child-free hotels spark controversy
North Korea is where this 95-year-old wants to die. South Korea won’t let him go. Is this our ally or a human rights enemy?
Hong Kong Launches Regulatory Regime and Trials for HKD-Backed Stablecoins
China rehearses September 3 Victory Day parade as imagery points to ‘loyal wingman’ FH-97 family presence
Trump Called Viktor Orbán: "Why Are You Using the Veto"
×