Meta has taken another hit after the Facebook-owner reached a $37.5m preliminary settlement in another privacy lawsuit. Market watchers now warn that the settlement should worry smaller firms without Meta’s “deep pockets”.

The settlement was filed earlier this week in San Francisco federal court. It now requires the approval of a judge. The settlement covers US Facebook users who used the platform after January 30, 2015.

The lawsuit dates back to November 2018. The claimants accused Facebook of violating its users’ privacy by tracking their movements without permission on their phones. Facebook collected user data even when users had turned off location settings on their phones, the claimants said.

“$37.5m is probably only a rounding error in Meta’s revenue numbers, so it’s a relatively trivial amount for Meta to pay to make this lawsuit go away,” Alan Calder, CEO of GRC International Group, tells Verdict. “It’s not admitted to wrongdoing, and it’s not clear therefore, that it’s agreed to cease using location data.”

Will Richmond Coggan, privacy and data disputes specialist at law firm Freeths tells Verdict that this settlement is not the first settlement Meta has reached. Meta has made attempts to have the location tracking lawsuit’s claims narrowed or dismissed.

“It is notable that this is the smallest of recent settlements, with $90m having been agreed in connection with Facebook’s tracking through plug-ins earlier this year, also in California,” says Richmond-Coggan.”

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In May, more than 1.4 million long- and short-term residents of Illinois started receiving checks for up to $397, as compensation for a similar $650m class action lawsuit settled against Facebook, CNBC reported.

“They continue to deny any wrongdoing,” says Richmond-Coggan. “It is important to understand that this probably represents a commercial decision on Meta’s part, rather than the dam breaking for further claims in relation to their alleged privacy infringements.

“The sums obtained also need to be viewed in the context of the legal fees incurred by the plaintiffs, which might erode that settlement pot by up to 30%, and of the size of the class which is reportedly 70 million.”

Richmond-Coggan says that even if the intense coverage of Meta’s lawsuit is not enough to get the company to reconsider its information collection approaches. He argues it is likely to shape approaches to emergent and data intensive technologies in Meta’s wider metaverse strategy.

“It will also be ringing alarm bells with those businesses operating in the same markets as Meta, but without quite the same deep pockets, who might now be thinking twice about mirroring the behaviours of these largest players when it comes to user information and privacy,” says Richmond-Coggan.

Meta’s latest scandal continues to show how “the metaverse will drive data privacy concerns to the forefront,” as Verdict previously reported.

“[Regulators] worldwide will force metaverse developers to address existing privacy issues associated with the underlining technologies. So that’s where we see issues arise,” Rupantar Guha, principal thematic analyst at GlobalData, makes that stark warning in a recent podcast from the research firm.

GlobalData is the parent company of Verdict and its sister publications.