Meta settles social media addiction lawsuit for up to $16.68 billion
The settlement with 29 state attorneys general mandates usage limits and nighttime blocks for teenage users, ending the trial in its second week.
Meta Platforms has agreed to pay up to $16.68 billion to settle a federal lawsuit brought by 29 state attorneys general, bringing an end to a trial that had only entered its second week. The case, presided over by US District Judge Yvonne Gonzalez Rogers in Oakland, California, centred on allegations that Instagram and Facebook were designed to hook young users and harvested the data of children under 13 for commercial benefit.
According to court filings, Meta denied wrongdoing as part of the agreement. Beyond the financial penalty, the settlement requires the company to implement specific operational changes for teenage users of Facebook and Instagram nationwide. These measures include the introduction of usage limits and nighttime blocks aimed at curbing screen time among younger demographics.
Market reaction to the news was mixed. Meta’s stock initially rose on the announcement before paring its gains, with traders weighing the implications for the company’s social media empire. In contrast, peers with a heavier reliance on younger users saw sharper declines. Snap stock plunged by more than 6%, while Roblox shares also fell, reflecting concerns over the regulatory focus on the under-16 demographic.
Mandeep Singh, Head of Technology Research at Bloomberg Intelligence, noted that while Meta is too large to be significantly affected by the penalty, the scrutiny on younger users presents a challenge for smaller competitors. He described the focus on how platforms impact the behaviour of users under 16 as a negative for engagement among companies like Snapchat and Roblox.
The settlement follows a string of legal battles Meta has faced regarding its impact on teens. The company has previously lost cases in Los Angeles and New Mexico, both of which it intends to appeal. This latest agreement resolves the specific claims made by the 29 states regarding product design and data harvesting.
Investors remain focused on broader tech sector movements, with Nvidia scheduled to report second-quarter earnings after the close on Wednesday. Consensus estimates point to adjusted earnings per share of $2.09 on revenue of $92 billion, a figure that would mark a 96% year-over-year jump in overall revenue.
