Investor Andreessen to take stand to defend his role in Facebook privacy case
WILMINGTON, Delaware (Reuters) -Famed investor Marc Andreessen is scheduled to take the stand on Thursday to defend his role on the Facebook board of directors when it was hit with a $5 billion fine in 2019 for alleged violations of an agreement with a U.S. regulator to protect user privacy.
Shareholders of Meta Platforms hope to hold the co-founder of the Andreessen Horowitz venture capital firm, along with Meta's CEO Mark Zuckerberg and others, liable for more than $8 billion in fines and legal costs the company paid in recent years to resolve claims that it had violated a 2012 agreement with the U.S. Federal Trade Commission.
The FTC fined Facebook $5 billion in 2019 for failing to comply with that agreement, which is central to the case.
Zuckerberg is expected to take the stand on Monday.
The shareholders want the 11 defendants to use their personal wealth to reimburse the company. The defendants have denied the allegations, which they have called "extreme claims."
Facebook changed its name to Meta in 2021. The company is not a defendant and declined to comment.
The non-jury trial before Chancellor Kathaleen McCormick that began on Wednesday is scheduled to run through the end of next week in Delaware's Court of Chancery.
A ruling in the case, which will mostly focus on decade-old events and board meetings, will likely take months after the trial.
Andreessen's appearance comes after his firm last week said it was changing its state of incorporation to Nevada from Delaware, where the majority of U.S. publicly traded companies are based. His firm cited the lack of certainty in Delaware courts, pointing to two rulings, including one by McCormick last year to rescind Elon Musk's $56 billion pay package from Tesla.
Most publicly traded U.S. companies are incorporated in Delaware, whose state budget relies on fees from chartering businesses. After his pay package was rescinded, Musk led his companies to incorporate in Texas from Delaware and encouraged others to follow, though only a handful have done so.
Delaware's lawmakers this year overhauled the state's corporate law in a bid to prevent companies from leaving.
Joel Fleming, an attorney who represents Meta shareholders, questioned if Andreessen's firm was trying to pressure the court, which he said would fail.
"It's a ham-fisted attempt to do what Elon Musk did -- to huff and puff and send a message to the Court of Chancery," said Fleming.
A spokesperson for the Andreessen Horowitz firm did not immediately respond to a request for comment.
The case will also feature testimony from former Facebook board members Peter Thiel, Palantir Technologies co-founder, and Reed Hastings, co-founder of Netflix.
Meta investors allege in the lawsuit that former and current board members completely failed to oversee the company's compliance with the 2012 FTC agreement and claim that Zuckerberg and former Chief Operating Officer Sheryl Sandberg knowingly ran Facebook as an illegal data harvesting operation.
The case followed revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now-defunct political consulting firm that worked for Donald Trump's successful U.S. presidential campaign in 2016. Those revelations led to the FTC fine, which was a record at the time.
On Wednesday, an expert witness for the plaintiffs testified about what he called "gaps and weaknesses" in Facebook's privacy policies but would not say if the company violated the 2012 agreement that Facebook reached with the FTC.
Jeffrey Zients, a former board member, testified on Wednesday that the company did not agree to the FTC fine to spare Zuckerberg legal liability, as shareholders allege.
On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019.
(Reporting by Tom Hals in Wilmington, Delaware;Editing by Noeleen Walder and David Gregorio)
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