Meta and the billion-pound class action 

QMUL English and film graduate Tuka Hassan discusses the class action case against Meta and trends in competition litigation

With tech giants dominating the legal market in recent years following more stringent regulatory guidelines and data protection laws, Meta has been at the forefront of multiple anti-competition claims. One of these claims is a multibillion-pound class action which has been ongoing since 2022. Meta has recently lost an appeal at the UK’s Court of Appeal against the Competition Appeal Tribunal’s decision to certify the class-action, allowing the £3.1 billion compensation claim to go to trial. This article will explore the wider implications of this claim from a range of perspectives.

Background

Dr Liza Lovdahl Gormsen filed a claim as the proposed class representative (PCR) against Facebook UK Limited, Meta Platforms Ireland Limited and Meta Platforms Inc with the Competition Appeal Tribunal on behalf of 44 million Facebook users in the UK. In competition law claims, collective proceedings against one or more defendants (in this case, Facebook and its parent company, Meta) must follow the Collective Proceedings Order (CPO) regime in order to be brought before the Competition Appeal Tribunal (CAT) at trial.

The CPO regime was reformed under the Consumer Rights Act 2015 to allow for US-style ‘opt-out’ actions – allowing a party to bring a claim on behalf of an entire class without the express knowledge or permission of each member of that class. In this instance, Dr Gormsen was able to amass a claim on behalf of 44 million Facebook users, creating a high-profile and potentially lucrative case.

Dr Gormsen claims that Meta abused its dominant position in the personal social network market by imposing unfair terms and prices on Facebook users through data usage, an alleged breach of statutory duty under section 47B of the Competition Act 1998. He argues that exploited user data by making Facebook users pay with their personal data to access the social networking platform and tracking their online activity to rack up billions of pounds worth of profit. Seeking up to £3 billion in damages, the claim was awarded certification in February 2024 after satisfying the requirements needed and is awaiting trial at the tribunal after a failed appeal by Meta in October 2024.

The rise in collective actions

The introduction of ‘opt-out’ actions created a claimant-friendly regime which is vital to understanding why the number of collective actions has risen and will continue to rise in the future. As people are automatically included in a claim, large damages figures will be produced, garnering enhanced media attention and creating greater anticipation of a definitive decision on a claim.

Furthermore, the CAT’s intention to widen access to justice is most notably seen in its approach towards proposed class representatives (PCR). Dr Gormsen was unsuccessful in her first attempt to achieve certification as the tribunal was ‘not convinced by the methodology for assessing quantum‘ – the amount of money legally payable in damages. The application was instead postponed for six months, allowing Dr Gormsen to try again and redraft the CPO application as the CAT will ‘not allow an application to fail on technical grounds’. The tribunal’s unanimous decision to allow the class-action to proceed underscores its commitment to a more accessible justice system. Overlooking technicalities in this instance suggests a lowered bar for certification and will enable consumers to address mass grievances against corporate giants more easily.

Litigation funders

As opt-out class-actions produce more substantial damages figures, some fear that the CPO regime could become a vehicle for litigation funders to achieve a return on investment rather than for the claimants themselves. Just last year, Meta was previously ordered to pay $725 million to Facebook users in the US following a privacy case, demonstrating just how profitable such claims can be for funders. In the UK, the top 15 funders reportedly have almost £2 billion of assets under their control. Claimants receive funding from a third-party funder (usually a hedge fund or private equity firm) to meet their legal costs. In exchange, funders receive a cut from any sum awarded by the courts. As funders are relying on a return on investment, such funding is usually only be available to high value claims, typically in the profitable commercial sector. Innsworth Capital Limited, the present litigation funder behind the claim against Meta and Facebook, has also funded mass legal actions against Mastercard, Ericsson and Volkswagen and so, this collective action could arguably be just the next potential hit towards a large corporate giant.

Why is this case controversial?

The overarching element of this case is about the value of data in the digital age. As the tech sector continues to advance at an exponential rate, personal data is rapidly evolving to be more of a currency. This case could influence other tech giants to consider how to adequately compensate users for their data.

Nevertheless, this claim could also be construed as an attack on Facebook’s business model, alleging that the platform’s service is fundamentally anti-competitive. At the core of this lawsuit is the fundamental question as to whether the acts of a company’s service only attract litigation claims once a company reaches a certain size and can therefore be accused of anti-competitive measures.

While this view seems plausible at first, it overlooks the years of public furor materialising from the uncertainty regarding the use of personal data and monetising it for capital gain. The effects of the Cambridge Analytica scandal during Trump’s 2016 presidential election as well as the EU Referendum in the same year marked the beginning of a ‘digital kleptocracy’ — high-level political power abused through stolen data of the public. Facebook was one of the key platforms used by people to spread highly targeted propaganda (in the form of videos, images, memes, blogs and advertisements among many others) aimed at the ‘persuadables’ — users who were considered politically and ideologically undecided through data mining technology and were therefore impressionable and exploitable. Many of those involved in the scandal would characterise these campaigns as forms of psychological warfare or ‘psyops’ — tactics intended to manipulate and influence people’s behaviour.

Platforms designed to connect us have arguable been weaponised, a shift that was nearly impossible to detect at the time, as Facebook also served as the space where we communicated with friends, shared baby pictures, and celebrated newlywed. Perhaps the sheer number of users necessitates a greater degree of responsibility to maintain ethical practice in the data domain and as a result, Dr Gormsen’s claim here has a legitimate precedent.

With tech companies such as Meta monopolising attention, there is increasing demand for legal regulation and protection of data privacy across the world. Whilst we can see change happening through the Competition and Markets Authority (CMA) and the Federal Trade Commission (FTC), there is also great demand for property rights in relation to personal data. Surpassing oil in value, granting the general population legal ownership of such a lucrative resource will be a step towards restoring trust in a constantly developing domain and reclaiming online identity.

Tuka Hassan is a first-class English and film graduate from Queen Mary’s University of London with an interest in politics, human rights, commercial law and IP and tech law.

The Legal Cheek Journal is sponsored by LPC Law.