Meta’s potential exit from Delaware had governor worried enough to call special weekend meetings
Meta CEO, Mark Zuckerberg and Tesla and SpaceX CEO, Elon Musk
Manuel Orbegozo | Chip Somodevilla | Reuters
After news broke on the last day of January that Meta might follow Elon Musk’s lead in exiting Delaware to incorporate in another state, Democratic Governor Matt Meyer sprung into action.
Delaware has long been the dominant state for U.S. companies to incorporate due to its flexible corporate code and expert judiciary. More than 20% of the state’s tax revenue, amounting to more than $1 billion a year, has historically come from corporate franchise fees, so state lawmakers can ill afford to preside over a mass exodus, or what’s been dubbed a “DExit.”
On Saturday, Feb. 1, a day after the Wall Street Journal published its story on Meta considering a Delaware departure, Gov. Meyer, who was brand new to the job, convened an online meeting with attorneys from law firms that have represented Meta, Musk, Tesla and others in shareholder disputes in the state, according to public records obtained by CNBC. Other attendees included members of the Delaware legislature.
The purpose of the meeting was to have a “Discussion re: Corporate Franchise,” one memo said.
The following day, records show, Meyer invited a second group to meet with him and new Secretary of State Charuni Patibanda-Sanchez. That invitation went to Kate Kelly, Meta’s corporate secretary, and to Dan Sachs, the company’s senior national director of state and local policy.
The invite also went to James Honaker, an attorney with Morris Nichols, a firm that’s represented Meta in federal court in Delaware, and to William Chandler, former chancellor of the Delaware Court of Chancery, who is now part of Wilson Sonsini’s Delaware litigation practice.
Roughly two weeks later, Delaware lawmakers were being asked to vote on a a bill, known as SB 21, that, if enacted, would overhaul the state’s corporate law in a manner that could favor Musk, Zuckerberg and other controlling shareholders of large companies.
Among other things, SB21 would alter how companies can use independent directors to ensure the deals they’ve made will not be subject to court scrutiny, and would limit the records that shareholders can obtain from companies when investigating possible breaches of fiduciary duty.
Late last week, the state Senate voted to pass an amended version of SB 21. If Delaware’s House of Representatives follows suit, in a vote expected as soon as Thursday, the bill would head to the governor’s desk to be signed into law.
That could remove a major overhang for Zuckerberg and Meta.
Meta has been the subject of “books and records” investigations in Delaware in recent months, according to two people directly involved in the matter who asked not to be named in order to discuss non-public investigations. Under current law, shareholders behind those probes could file cases alleging that Zuckerberg or other Meta directors caused billions of dollars in damages, according to the people and Delaware records viewed by CNBC.
If SB 21 passes, any claims filed after Feb. 17, the day the bill was brought to the assembly, would be considered under the new law. That means shareholders wouldn’t have the benefit of the current law, and investor protections that come with it, when their new claims are considered in Delaware court.
A Meta spokesperson declined to comment.
Mila Myles, a spokeswoman for Gov. Meyer, said in a statement that the governor has spent his first few weeks on the job meeting with “plaintiffs attorneys, Delaware corporate attorneys and countless Delaware incorporated companies,” adding that he is not “doing the bidding of any billionaire.”
Cozying up to Trump
Musk drew national attention to Delaware’s corporate law in 2024 after a judge there ruled that his $56 billion Tesla pay package from 2018 was illegally granted and should be rescinded. He wrote on X, “Never incorporate your company in the state of Delaware,” and subsequently moved Tesla to Texas while accusing the judge behind the ruling of “absolute corruption.“
Musk also became a top donor to Donald Trump’s presidential campaign, and is now a lead adviser to his White House, running the so-called Department of Government Efficiency.
Zuckerberg, who had a notably rocky relationship with Trump during the president’s first term, has been publicly currying favor this go-round. He’s taken measures like ending Meta’s diversity, equity and inclusion (DEI) programs, getting rid of third-party factcheckers in favor of a “Community Notes” model used by Musk’s X platform, and adding Dana White, CEO of the Ultimate Fighting Championship and a longtime friend of Trump, to his company’s board weeks before the new administration began.
Meta also agreed in January to pay $25 million to settle a four-year-old lawsuit over the company’s decision to suspend Trump’s accounts after the Jan. 6 Capitol riot.
News that Zuckerberg was considering a move out of Delaware landed a little over a week after President Donald Trump’s inauguration, which the Meta CEO attended along with other tech leaders.
Mark Zuckerberg arrives before the inauguration of Donald Trump as the 47th president of the United States takes place inside the Capitol Rotunda of the U.S. Capitol building in Washington, D.C., Monday, Jan. 20, 2025.
Kenny Holston | Via Reuters
Meta hasn’t publicly commented on whether it plans to reincorporate outside of the state.
As CNBC previously reported, authors of SB 21 included Richards, Layton & Finger, a corporate defense firm that counts Musk and Tesla as clients. It was co-written by Delaware Law School professor Lawrence Hamermesh, as well as Chandler, the ex-chancellor, and former Delaware Supreme Court Justice Leo Strine.
Strine works for Wachtell, Lipton, Rosen and Katz, which is representing Zuckerberg in a separate matter tied to the company’s involvement in the 2018 Cambridge Analytica scandal. In 2019, Meta agreed to pay a $5 billion fine to settle related charges with the FTC.
SB 21 was introduced to Delaware’s General Assembly on Feb. 17, by Senate Majority Leader Bryan Townsend, who had attended the first of the two meetings held by Gov. Meyer. The process of drafting the bill didn’t follow Delaware’s traditional practice of changing corporate law, which typically involves writing and review by the state’s bar association, and a committee within it called the Corporation Law Council.
Reforms outlined in SB 21 have been supported by corporate defense firms and attorneys, including those who helped draft the bill. They’ve been vociferously opposed by shareholders’ attorneys and investment groups, including CalPERS and ICGN, who say they want to ensure that controlling shareholders don’t make self-interested deals or decisions that go against the wishes and rights of the broader investor base.
On Feb. 2, Myles from the governor’s communications office shared a memo with legislators and attorneys who had attended the weekend meetings. It included a list of talking points in defense of SB21.
The memo, obtained by CNBC, said Delaware prides itself on serving as “home to the world’s leading companies,” having the “best law and jurisprudence” for businesses, and remains the “premier destination in America for business formation.”
“Whenever an entity — regardless of size — exits Delaware for one of our sister jurisdictions, our goal is to earn their business back,” the memo said. “In many cases, companies that reincorporate out of Delaware return to Delaware.”
Read the public records here:
Nvidia CEO Jensen Huang delivers the keynote address during the Nvidia GTC 2025 at SAP Center on March 18, 2025 in San Jose, California.
Justin Sullivan | Getty Images
Nvidia said on Tuesday that it will take a quarterly charge of about $5.5 billion tied to exporting H20 graphics processing units to China and other destinations. The stock slid more than 6% in extended trading.
On April 9, the U.S. government told Nvidia it would require a license to export the chips to China and a handful of other countries, the company said in a filing.
The disclosure is the strongest sign so far that Nvidia’s historic growth could be slowed by increased export restrictions on its chips, which the U.S. government says can be used to create supercomputers for military uses. Nvidia reports fiscal first-quarter results on May 28.
During President Biden’s administration, the U.S. restricted AI chip exports in 2022 and then updated the rules the following year to prevent the sale of more advanced AI processors. The H20 is an AI chip for China that was designed to comply with U.S. export restrictions. It generated an estimated $12 billion to $15 billion in revenue in 2024.
Nvidia CEO Jensen Huang said on the company’s last quarterly earnings call in February that revenue from China had dropped to half of pre-export control levels. Huang warned that competition in China is growing, and for the second straight year, Nvidia listed Huawei as a competitor in its annual filing.
China is Nvidia’s fourth-largest region by sales, after the U.S., Singapore, and Taiwan, according to the company’s annual report. More than half of its sales went to U.S. companies in its fiscal year that ended in January.
Nvidia’s H20 chip is comparable to the H100 and H200 AI chips used in the U.S. and other countries, but it has slower interconnection speeds and bandwidth. It’s based on a previous generation of AI architecture called Hopper introduced in 2022. Nvidia is now focusing on selling its current generation of AI chips, called Blackwell.
DeepSeek, the Chinese company whose competitive AI model R1 unveiled earlier this year upended markets, used H20 chips in its research.
In addition to the existing Chinese export controls, Nvidia also faces new restrictions on what it can export starting next month, under “AI diffusion rules” first proposed by the Biden administration.
Nvidia has argued that further controls on its chips would stifle competition and potentially even erode U.S. competitiveness in technology. The company previously said it moved some of its operations, including testing and distribution, out of China after the 2022 export controls.
At the company’s annual conference last month, when asked about Chinese export controls, Huang said Nvidia works to comply with the law, but he also noted that about half of the world’s AI researchers are from China, and many of those work at U.S.-based AI labs.
Nvidia said in Tuesday’s filing that the U.S. government told the company on Monday that the license requirement for H20 chips would be in effect “for the indefinite future.”
Nvidia shares have dropped 16% this year, largely due to President Trump’s announcement of widespread tariffs on top trading partners. While exemptions have been made on various electronics products, including smartphones, computers and semiconductors, Trump and some officials said over the weekend that the reprieve was temporary and part of plans to apply separate tariffs to the sector.
Shares of Advanced Micro Devices dropped more than 7% in after-hours trading on Tuesday following Nvidia’s disclosure. AI chipmaker Broadcom fell almost 4%.
WATCH: Nvidia says U.S. requires license to export H20 products to China
Dylan Field, co-founder and CEO of Figma Inc., after the morning sessions at the Allen & Co. Media and Technology Conference in Sun Valley, Idaho, on July 11, 2024.
Bloomberg | Bloomberg | Getty Images
Design software maker Figma said on Tuesday that it has submitted paperwork to the U.S. Securities and Exchange Commission for an initial public offering.
The confidential filing lands 16 months after the company scrapped a deal to be acquired by Adobe for $20 billion due to regulatory pressure in the U.K. The San Francisco startup had originally agreed to the deal 2022. Adobe paid Figma a $1 billion termination fee.
Figma’s software is popular among designers inside companies who need to collaborate on prototypes for websites and apps. The company was valued at $12.5 billion in a 2024 tender offer.
“There are two paths that venture-funded startups go down,” Dylan Field, Figma’s co-founder and CEO, said in an interview with The Verge last year. “You either get acquired or you go public. And we explored thoroughly the acquisition route.”
The announcement lands at a precarious moment for the tech IPO market, which has been largely dormant since late 2021. The Trump presidency was expected to revive new offerings due to promises of less burdensome regulations.
But after filing their prospectuses with the SEC, fintech company Klarna and online ticket marketplace StubHub delayed their IPOs earlier this month following the market turmoil caused by Trump’s announcements on widespread tariffs. Digital banking service Chime, which had filed confidentially with the SEC, also postponed its planned offering.
Turo, a car-sharing service, withdrew its IPO prospectus in February, three years after filing its initial prospectus.
Figma was founded in 2012 and is backed by investors including Andreessen Horowitz, Durable Capital, Greylock Partners, Index Ventures, Kleiner Perkins and Sequoia Capital. The company, which ranked 26th on CNBC’s Disruptor 50 list in 2024, had about $600 million in annual revenue as of early last year.
— CNBC’s Ari Levy contributed to this report.
Technology
Meta CEO Mark Zuckerberg considered spinning off Instagram from Facebook in 2018: FTC trial
Thilina Kaluthotage | Nurphoto | Getty Images
Meta CEO Mark Zuckerberg considered spinning out Instagram in 2018 on concerns about the rising threat of antitrust litigation against Facebook, according to an email presented Tuesday in a Washington, D.C. courtroom.
During Zuckerberg’s second day of testimony in Meta’s antitrust trial with the Federal Trade Commission, lawyers representing the FTC introduced an email from May 2018, in which Zuckerberg appeared to comment on the possibility of separating the photo-sharing app his company purchased in 2012 for $1 billion.
“And i’m beginning to wonder whether spinning Instagram out is the the only structure that will accomplish a number of important goals,” Zuckerberg wrote in the email. “As calls to break up the big tech companies grow, there is a non-trivial chance that we will be forced to spin out Instagram and perhaps WhatsApp in the next 5-10 years anyway. This is one more factor we should consider.”
Facebook bought Instagram in 2012, when the photo app had 13 employees and Zuckerberg was poised to take his company public in what, at the time, was the largest tech IPO on record. The purchase of Instagram and 2014 acquisition of WhatsApp for $19 billion are at the heart of the blockbuster antitrust trial that kicked off Monday and could last weeks.
The FTC alleges that Meta monopolizes the social networking market, and has argued that the company shouldn’t have been able to complete those acquisitions. The agency is seeking to cleave the apps from Meta as a possible remedy.
Meta disputes the FTC’s allegations and claims the regulator mischaracterizes the competitive landscape and fails to acknowledge a number of rivals like TikTok and Apple’s iMessage, and not merely other apps like Snapchat. Earlier in the trial, the FTC also presented an Oct. 2013 email in which Zuckerberg told other Facebook executives that Snap CEO Evan Spiegel rebuffed his $6 billion offer to buy Snapchat.
Zuckerberg also said in the 2018 email that the company’s “best estimates are that, had Instagram remained independent, it would likely be around the size of Twitter or Snapchat with 300-400 million MAP today, rather than closer to 1 billion.” MAP is short for monthly active people.
WATCH: Mark Zuckerberg takes witness stand on first day of antitrust trial.
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