Meta Platforms has agreed to pay up to $16.7 billion and implement significant changes to the operation of Facebook and Instagram. These steps are aimed at resolving claims from states across the United States, which alleged that the company designed its platforms to create dependency in children, misled consumers about service safety, and improperly collected minors' personal data.
This settlement concludes federal litigation, which became one of the most high-profile tests of accusations that social media companies harm young users. As part of the agreement, Meta commits to setting daily usage limits and restricting nighttime access for children using Facebook and Instagram, as well as strengthening measures to prevent children from accessing age-restricted content. The company, based in Menlo Park, California, denies any wrongdoing in reaching the global settlement.
The agreement, reached on Wednesday, also resolves lawsuits filed by California, Illinois, New Mexico, and Washington, D.C., concerning privacy issues related to the Cambridge Analytica scandal. In this scandal, the consulting firm collected the personal data of millions of Facebook users. These states will receive $459.3 million to settle the respective claims.
Following the announcement of the agreement, Meta's shares rose by 2.3% in early trading. These claims are part of a broader wave of lawsuits initiated by states, local authorities, school districts, and private individuals. They allege that Meta and other social networks have contributed to the development of a mental health crisis among youth nationwide.
In federal court in Oakland, California, lawsuits were heard from California, Colorado, Kentucky, and New Jersey regarding violations of state consumer protection laws. Furthermore, 29 states accused Meta of violating the Federal Children's Online Privacy Protection Act. This was due to collecting personal data of users whom the company knew were children without parental notification or consent, and using this data to train machine learning models and generative AI.
Before the start of the lawsuit, on August 18, Meta stated that California, Colorado, Kentucky, and New Jersey were demanding compensation of up to $1.4 trillion, although the states suggested the amount would be closer to $200 billion.
Meta, along with its parent companies Snapchat (Snap), YouTube (Alphabet), TikTok (ByteDance), and others, still faces thousands of lawsuits in federal and state courts. The allegations concern intentionally creating features on their platforms that cause addiction in children and adolescents, thereby exacerbating the mental health crisis. Last month, a trial began in Nashville regarding lawsuits filed by Tennessee against Meta.
The federal cases were consolidated before U.S. District Judge Ivonne Gonzalez Rogers in Oakland. The lawsuits include actions from private individuals, school districts, and government agencies.
Earlier this year, Meta lost in both phases of a major lawsuit initiated by New Mexico. In March, a jury ruled that the company must pay $375 million after establishing that it misled consumers about the safety of its platforms. On August 6, the judge deemed Meta a source of public concern and ordered it to pay an additional $567 million and implement youth safety measures.
Also in March, the first trial in a private individual's lawsuit against Meta and Google concluded in favor of the plaintiff. A jury in Los Angeles found both companies liable for depression and anxiety and ordered them to pay the plaintiff, Kaelei GM, $6 million in damages. Both companies stated their intention to appeal these decisions.
