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Dec. 23 (UPI) -- Facebook's parent company Meta has agreed to pay $725 million to settle a class-action lawsuit that accused the company of allowing third parties to harvest the personal data of millions of social media users. A federal judge overseeing the 2018 Cambridge Analytica case in the Northern District of California still has to give final approval to the settlement and is expected to hand down that decision next March.
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The payout would become the "largest recovery ever achieved in a data privacy class action and the most Facebook has ever paid to resolve a private class action," according to court documents filed late Thursday by Keller Rohrback L.L.P, the firm representing the plaintiffs in the case.
The legal action was prompted by a scandal that emerged five years ago when the social media giant revealed that personal information from at least 87 million profiles had been harvested and shared with Cambridge Analytica -- a now-defunct political consulting firm co-founded by Steve Bannon, which helped Donald Trump's 2016 campaign for president.
Soon after the data incident came to light, executives for Cambridge Analytica were exposed on surveillance footage discussing bribes and other various schemes designed to help Trump and other dark horse candidates win votes.
The debacle angered privacy advocates around the world who called for governments to bring penalties and increased regulations against the social media giants.
The number of people affected in the Cambridge Analytica case was estimated to be "in the range of 250-280 million" and included "all Facebook users in the United States ... from May 24, 2007, to December 22, 2022," according to a statement from lawyers announcing the settlement.
As part of the deal, Facebook was not required to admit to any wrongdoing, although Meta officials have previously acknowledged updates to its privacy and sharing protocols.
"We pursued a settlement as it's in the best interest of our community and shareholders," a Meta spokesperson told CNBC. "Over the last three years, we revamped our approach to privacy and implemented a comprehensive privacy program."
Tech companies have faced increasing investigative scrutiny in recent years as governments around the world seek to rein in an industry that had been largely unregulated before the turn of the 21st century.
In 2019, Facebook paid $5 billion to the Federal Trade Commission for violating a previous federal agreement that required the company to notify users if data was shared with third parties. Around the same time, the social media giant was also hit with a $100 million fine from the Securities and Exchange Commission due to similar allegations.
Earlier this week, Meta was charged by the European Union for alleged antitrust violations related to its Facebook marketplace service.
The social media giant also faces pressure to modify its business practices after the EU passed new laws earlier this year that seek to establish a level playing field for digital traders by 2024.
In a separate development this week, Amazon also reached a regulatory deal with EU that will give foreign merchants increased access after the e-commerce giant was accused of using its indomitable size and reach to drive out competition across Europe.
The new rules will also force the tech giants to become more proactive in content moderation processes on their respective platforms.
