The long-running dispute accused the social media giant of allowing third parties, including the British firm, to access Facebook users' data.
Lawyers say that the proposed sum is the largest in a US data privacy class action.
Meta, which did not admit wrongdoing, said it had "revamped" its approach to privacy over the past three years.
The company said settling was "in the best interest of our community and shareholders."
"We look forward to continuing to build services people love and trust with privacy at the forefront."
According to tech author James Ball, it was "not surprising" that Meta had to agree to a severe pay-out, but it was "not that much" money to the tech giant.
"It's less than a tenth of what it spent on its efforts to create "the metaverse" last year alone," he said.
"So Meta probably won't be too unhappy with this deal, but it does stand as a warning to social media companies that mistakes can prove very costly indeed."
The suggested settlement, which was disclosed in a court filing late on Thursday, is subject to a federal judge's approval in San Francisco.
"This historic settlement will provide meaningful relief to the class in this complex and novel privacy case," lead lawyers for the plaintiffs, Derek Loeser and Lesley Weaver, said in a statement.
- The Facebook scandal "hit 87 million users."
- Cambridge Analytica has agreed to pay a fine to Facebook.
- Facebook is being sued for "losing control" of the data of its users.
The complaint was filed on behalf of a large proposed class of Facebook users whose personal data on the social network was released to third parties without their consent.
According to the ruling document, the class size is "in the range of 250–280 million" people, representing all Facebook users in the US during the "class period," which runs from May 24, 2007, to December 22, 2022.
It is unclear how the plaintiffs would claim their share of the settlement.
Janis Wong, a privacy and ethics researcher at the Alan Turing Institute, said it would only amount to two or three dollars per person if each individual decided to make a claim.
A further hearing on the settlement is due to take place on March 2, 2023.
"Even though this $725 million settlement doesn't cover UK users, earlier this year, a competition law expert put forward a multi-billion dollar class action suit against Meta regarding users' data exploitation that does cover the Cambridge Analytica period."
"We should hear more about that from the UK Competition Appeal Tribunal in the new year," she told the BBC.
The harvesting of Facebook users' personal information by third-party apps was at the center of the Cambridge Analytica privacy scandal, exposed in 2018.
The consulting firm, now defunct, worked for Donald Trump's successful presidential campaign in 2016 and used personal information from millions of US Facebook accounts for voter profiling and targeting.
The firm obtained that information without users' consent from a researcher who had been allowed by Facebook to deploy an app on the platform that harvested data from millions of its users.
Facebook believes the data of up to 87 million people was improperly shared with the political consultancy.
The scandal prompted government investigations into Facebook's privacy practices, leading to lawsuits and a high-profile US congressional hearing in which Meta boss Mark Zuckerberg was questioned.
In 2019, Facebook agreed to pay $5 billion to resolve a Federal Trade Commission probe into its privacy practices.
The tech giant also paid $100 million to settle Securities and Exchange Commission claims that it misled investors about misusing users' data.
Investigations by state attorneys general are continuing, and the company is challenging a legal action by the attorney general for Washington, DC.
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