Meta has agreed to pay a maximum of $16.68 billion to settle claims brought by states across the United States that the company designed Facebook and Instagram to be addictive to children, misled consumers about their safety, and improperly collected children's personal data, according to court filings. The settlement was reached mid-trial in a California federal court, averting a verdict in one of the highest-profile tests yet of allegations that social media platforms have harmed young users.
The case had been brought by 29 states and covered two distinct sets of claims. Four of them, California, Colorado, Kentucky and New Jersey, alleged that Meta violated their state consumer protection laws. All 29 states alleged that the company breached the federal Children's Online Privacy Protection Act by collecting personal data from users it knew to be children, without parental notification or consent, and then using that data to train machine learning and generative AI models.
As part of the deal, Meta has agreed to introduce nationwide changes for teenage users of Facebook and Instagram, including default daily usage limits and night-time blocks, alongside stronger age-verification systems and additional tools for parents and guardians. The Menlo Park-based company denied any wrongdoing in agreeing to the settlement. Meta shares rose between 4% and 4.4% in pre-market trading following the news, according to Reuters and the Financial Times.
Meta had rejected the allegations, saying it had worked hard to protect children on its platforms, and argued in court filings that it could not have misled consumers about whether its services were addictive since "social media addiction" is not a recognised psychiatric condition. Ahead of the trial, the company said the four consumer protection states were seeking penalties of up to $1.4 trillion, a figure the states themselves later suggested would more realistically land closer to $200 billion. Beyond monetary damages, the states had also sought a court order forcing Meta to overhaul its platforms and bar children from creating accounts altogether.
Part of a wider reckoning
The settlement is one piece of a much larger wave of litigation. Meta, Snapchat owner Snap, YouTube owner Alphabet, and TikTok owner ByteDance all face thousands of lawsuits in federal and state courts alleging they knowingly built addictive features into their platforms, fuelling a youth mental health crisis. The federal cases have been consolidated before US District Judge Yvonne Gonzalez Rogers in Oakland and include suits brought by individuals, school districts and state governments, while a separate Los Angeles court is overseeing thousands of additional cases brought by individuals who say they or their loved ones were harmed. Roughly 30 states have filed their own lawsuits in state courts, and a separate trial against Meta has been under way in Nashville since July.
The California settlement follows a string of costly defeats for Meta. In New Mexico, a jury ordered the company in March to pay $375 million after finding it had misled consumers about platform safety, and a judge added a further $567 million in August after ruling that Meta had created a public nuisance, alongside an order to implement youth-safety measures. Separately in March, a Los Angeles jury found Meta and Google liable for a plaintiff's depression and anxiety, ordering the two companies to pay a combined $6 million in damages. Both companies have said they intend to appeal. All four major platforms previously settled the first case to reach federal trial, brought by Kentucky's Breathitt County School District, for a combined $27 million.
Sources: Reuters, Financial Times
