Meta Platforms will pay as much as $16.68 billion and impose new restrictions on younger users of Facebook and Instagram under a settlement with U.S. states, bringing a closely watched federal trial over alleged harms to children to an early end.
The agreement resolves claims from 29 states that accused Meta of building features that encouraged compulsive use by children, misleading consumers about the safety of its services and improperly collecting minors’ personal information, according to Reuters. Meta denied wrongdoing as part of the settlement.
The deal marks one of the most consequential legal settlements yet involving the social-media industry’s treatment of young users. It also removes a significant source of uncertainty for Meta after a federal trial began Aug. 18 in Oakland, California, putting the company’s youth-safety practices under renewed scrutiny.
Under the agreement, Meta will introduce daily limits on how long children can use Facebook and Instagram, restrict access during nighttime hours and strengthen controls intended to keep minors away from age-restricted material, Reuters reported.
The financial exposure, while substantial, is far below the penalties that had been discussed before trial. Meta said California, Colorado, Kentucky and New Jersey had sought as much as $1.4 trillion, while the states put the potential figure closer to $200 billion, according to Reuters.
Meta shares rose 2.3% in early trading following news of the agreement, Reuters reported, suggesting investors viewed the resolution as reducing at least some of the legal risk hanging over the company.
The litigation combined several strands of the intensifying legal challenge facing the social-media industry. California, Colorado, Kentucky and New Jersey alleged Meta violated state consumer-protection statutes. Separately, the 29 states accused the company of violating the federal Children’s Online Privacy Protection Act by gathering information from children without appropriate parental notice or consent, according to Reuters. The states also alleged that some of the data was used to develop machine-learning and generative artificial-intelligence systems.
Meta has disputed the broader premise behind the litigation. The company has argued that it could not have deceived consumers about its products being addictive because social-media addiction isn’t formally recognized as a psychiatric condition, Reuters reported.
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The settlement also reaches beyond the youth-safety dispute. California, Illinois, New Mexico and Washington, D.C., will receive $459.3 million to resolve separate privacy litigation connected with Cambridge Analytica, the political consulting firm that obtained data involving millions of Facebook users, according to Reuters.
Legal Pressure Remains
The agreement doesn’t end Meta’s broader courtroom exposure.
Meta and other major technology companies — including the owners of Snapchat, YouTube and TikTok — continue to face thousands of cases in state and federal courts alleging that social-media platforms deliberately incorporated features that encouraged excessive use among children and teenagers and contributed to a youth mental-health crisis, Reuters reported.
The federal litigation has been consolidated before U.S. District Judge Yvonne Gonzalez Rogers in Oakland and includes claims from individuals, school districts and governments.
Meta has already suffered significant setbacks in related cases this year. A New Mexico jury in March ordered the company to pay $375 million after finding that it misled consumers about platform safety. On Aug. 6, a judge concluded Meta had created a public nuisance and imposed another $567 million in penalties along with youth-safety requirements, according to Reuters. Meta has said it will appeal.
A separate Los Angeles case in March resulted in a jury finding Meta and Alphabet’s Google liable for a young plaintiff’s depression and anxiety and awarding $6 million in combined damages. The companies have said they will appeal that verdict as well, Reuters reported.
The latest settlement therefore removes one major legal confrontation without resolving the larger question confronting Meta and its peers: how far courts and regulators will require social-media companies to alter products designed around engagement when those products are used by children.
Source: Reuters
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