Meta to pay up to $16.68b to settle child harm claims, sets new limits for teenage users

Dubai: Meta Platforms has agreed to pay up to $16.68 billion to settle claims that Facebook and Instagram harmed young users and improperly collected children’s personal data, according to court papers.

The agreement was reached during a federal trial in California involving 29 US states. It ends one of the most closely watched legal tests of allegations that social media platforms deliberately encouraged compulsive use among children and teenagers.

Meta also agreed to introduce nationwide changes for teenage Facebook and Instagram users, including daily usage limits and nighttime blocks, the filings showed.

The Menlo Park-based company denied wrongdoing as part of the settlement. Meta has maintained that it has invested heavily in protecting children across its platforms.

Its shares rose 4.4% in pre-market trading after the agreement was disclosed.

Claims over children’s data

The trial combined two main sets of allegations against Meta. California, Colorado, Kentucky and New Jersey accused the company of violating state consumer protection laws. Their attorneys general alleged that Meta knowingly designed features that encouraged young people to spend prolonged periods on its platforms while misleading users about their safety.

A wider group of 29 states claimed Meta violated the federal Children’s Online Privacy Protection Act. The states accused the company of collecting data from users it knew were under 13 without notifying their parents or obtaining consent.

They also alleged that Meta used the information to train machine-learning systems and generative artificial intelligence models.

Meta rejected the accusations. It argued that it could not have misled consumers about whether its services were addictive because “social media addiction” is not recognised as a psychiatric condition.

Before the trial, Meta said the four states were seeking penalties of up to $1.4 trillion. The states later suggested that the figure would be closer to $200 billion.

They had also sought further damages, extensive changes to Facebook and Instagram and an order preventing children from opening accounts.

Jurors heard testimony from Instagram head Adam Mosseri and current and former Meta employees during the trial’s opening week. The evidence covered how the platforms were designed and how teenagers interacted with tools intended to reduce problematic use. Meta founder and chief executive Mark Zuckerberg had also been expected to testify.

Thousands of cases remain

The settlement resolves the claims covered by the California federal trial, but it does not end the wider legal campaign against social media companies.

Meta, Snap, YouTube owner Alphabet and TikTok parent ByteDance still face thousands of lawsuits in federal and state courts. Individuals, families, school districts and governments allege that the companies knowingly created features that could become compulsive and contributed to mental health problems among young users.

More than 3,000 personal injury claims and about 1,300 lawsuits brought by public school districts are pending against the companies across the US.

Federal cases have been consolidated before US District Judge Yvonne Gonzalez Rogers in Oakland. Thousands of other lawsuits are moving through state courts, including proceedings overseen by a judge in Los Angeles.

Around 30 states have also brought cases in state courts, according to court records. A separate trial involving Tennessee’s claims against Meta has been under way in Nashville since July.

The legal pressure has intensified following a series of verdicts against Meta.

A New Mexico jury ordered the company to pay $375 million in March after finding that it misled consumers about the safety of its platforms. On August 6, a judge found that Meta had created a public nuisance and directed it to pay another $567 million and introduce youth-safety measures.

Meta to appeal decisions

Meta has said it will appeal those decisions.

A separate Los Angeles trial in March ended with Meta and Google being held liable for a plaintiff’s depression and anxiety. The jury awarded Kaley G.M. a combined $6 million in damages from the two companies, which have also said they will appeal.

Meta, Google, Snap and TikTok previously settled the first federal case scheduled for trial. That lawsuit was brought by Kentucky’s Breathitt County School District, which was set to receive a combined $27 million, according to public records.

The latest agreement removes a major immediate legal risk for Meta while imposing new controls on how teenagers use its platforms. The company and its rivals still face substantial potential liabilities from the unresolved cases moving through US courts.

 - With inputs from Agencies