How does Facebook use your data? Lingering Delaware court battle could provide details
Karl Baker
On Wednesday, lawmakers in the United Kingdom published 250 pages of Facebook's internal emails showing how the company for years had aggressively hunted for ways to profit off of its massive database of user information.
Meanwhile, in Delaware, a court battle is seeking to strip Facebook's 34-year-old CEO, Mark Zuckerberg, of a portion of his influence over the dominant social media company.
An upcoming hearing in the case, scheduled for later this month, could force the $400 billion company to disclose even more of its confidential documents, likely revealing further details about how executives made decisions at their Silicon Valley headquarters.
The actions on each side of the Atlantic are the latest in a global outrage that erupted following reports earlier this year about how a political consultant used Facebook's personal data to construct psychological profiles of users.
The "profiles were then used to target and manipulate users for political gain," stated a Delaware shareholder suit brought by Karen Sbriglio and the Firemen's Retirement System of St. Louis.
The shareholder suit is one of a handful filed in Delaware Chancery Court in recent months aiming squarely at Zuckerberg's control over the company.
The litigant shareholders claim Zuckerberg has been too cozy with Facebook's board of directors, a relationship that has kept board members from carrying out oversight prior to the company's recent scandals.
Chief among them, and the most damaging to Facebook's value, came from reports in March about Cambridge Analytica. The reports claimed that the political consulting firm siphoned personal data from the accounts of tens of millions of Facebook users without their consent.
Donald Trump's presidential campaign hired Cambridge Analytica during his 2016 run.
"When the full extent of the governance crisis was revealed on July 25, 2018, Facebook shareholders lost more than $119 billion -- the largest single-day loss of shareholder value in history," Sbriglio's suit states.
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Yet, attorneys for separate shareholders, who also are suing Facebook in Delaware, want Sbriglio to temporarily halt the case. They say Facebook first must hand over company records to plaintiffs before a Delaware judge scrutinizes whether the case has merit and should proceed.
What has resulted is a surprisingly bitter battle between two groups that each are suing Facebook over how to go on the attack against one of the richest companies in the world.
While at issue is a deep-in-the-weeds Delaware incorporation law, the implications of the dispute could impact who ultimately controls Facebook.
Attorneys for the City of Birmingham (Alabama) Relief and Retirement System say Sbriglio has "chosen to fire before aiming."
Sbriglio's attorneys claim there is no need to pursue a lengthy records battle with Facebook because of the already vast amounts of information that have been made public in the past year from news reports, testimony in front of the British House of Commons and the U.S. Senate, and public statements by whistleblowers.
This is an unusual case where Facebook's internal records "pale in significance to what was already public," Sbriglio's attorneys state in court documents.
City of Birmingham's attorneys want to chase a "wasteful strategy in the speculative hope that maybe Facebook improperly withheld a smoking-gun ... document," they said in the court filing.
Attorneys for both parties of shareholders declined to comment for this story and therefore it is unclear how the recent emails revealed by British lawmakers on Wednesday will impact the dispute.
The U.K. investigation
Damian Collins, chairman of the British parliamentary committee investigating Facebook, said lawmakers released the documents because "we don't feel we have had straight answers from Facebook on these important issues."
Last week, Collins announced he planned to release the emails after forcing Ted Kramer, founder of Six4Three, to hand them over during a business trip to London.
Kramer obtained the emails after Six4Three sued Facebook in 2015, alleging the social network's data policies favored some companies over others.
On Friday, California Superior Court Judge V. Raymond Swope ordered Kramer to turn over his laptop to a forensic expert after Kramer admitted he had turned over the Facebook documents to lawmakers.
"I believe there is considerable public interest in releasing these documents. They raise important questions about how Facebook treats users' data, their policies for working with app developers, and how they exercise their dominant position in the social media market," he wrote in a Twitter post.
Contact Karl Baker at kbaker@delawareonline.com or (302) 324-2329. Follow him on Twitter @kbaker6.
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