Meta faces $200 billion lawsuit as US federal trial begins

Opening statements have commenced in a US federal court trial involving 29 state attorneys general who have accused Meta, the parent company of Facebook and Instagram, of designing its platforms to encourage addictive behaviour in minors. The coalition alleges that Meta engineered features such as infinite scrolling to keep young users engaged while collecting data on them, despite internal knowledge of the potential for harm. The trial is expected to last up to six weeks and represents a significant escalation in regulatory scrutiny of major technology firms.

The plaintiffs are seeking up to $200 billion in damages, a figure roughly equivalent to Meta’s 2025 revenue of $201 billion. This demand significantly exceeds previous penalties, including a $375 million civil penalty ordered by a New Mexico jury in March and an additional $567 million ordered by a judge earlier this month. Beyond financial compensation, the states are requesting structural changes to Meta’s business model, including the elimination of infinite scroll, the removal of algorithms and AI models derived from data compiled from minors, and the implementation of time restrictions for young users.

Meta denies the allegations, with a spokesperson stating that the company stands by its record of creating strong protections for teens. The company noted that it introduced features in 2023 to help teens manage time use and advertisements, including notifications for usage exceeding 20 minutes. However, the lawsuit argues these measures are insufficient, alleging that teens could easily dismiss the notifications and continue scrolling. Meta faces significant financial exposure, with its cash flow decreasing from $12 billion in the first quarter to $784 million in the second quarter of the current year.

The potential impact on Meta’s advertising business is a central concern for analysts. The company’s revenue is heavily dependent on user engagement and ad impressions, which rose by 12 percent in 2025 compared to 2024. A legal requirement to alter the platform’s core mechanics could undermine this model. Meta’s Reality Labs division has also lost $70 billion since 2020, adding to the company’s financial pressures as it ramps up spending on AI infrastructure.

This litigation is part of a broader trend, with Meta currently facing lawsuits from more than 100,000 different parties, including individuals, cities, states, and school districts. Other tech companies, including Snap, TikTok, and Google’s YouTube, have also faced litigation regarding allegations of encouraging compulsive use by young people. Legal experts suggest that the outcome of this case may set a precedent for the industry, potentially leading to a global settlement similar to the 1998 tobacco litigation where 46 US states settled with major cigarette manufacturers.

The trial highlights the growing intersection of technology regulation and public health, with states arguing that social media platforms bear responsibility for the wellbeing of their youngest users. As the case proceeds, the focus remains on whether the court will mandate fundamental changes to how social media platforms operate, potentially reshaping the industry’s approach to user engagement and data collection.