Meta has agreed to pay a maximum of $16.68bn as part of a settlement to resolve claims brought by states across the country that the company designed Facebook and Instagram to addict children, misled consumers about their safety, and improperly collected personal data of children who used its platforms, court papers show.
The settlement was reached during a California federal trial over claims brought by 29 states, averting one of the highest-profile tests yet of allegations that social media companies harmed young users.
Changes for teenage users
Meta also agreed to make changes for teenage users of Facebook and Instagram nationwide, including daily usage limits and nighttime blocks, the filing shows, Reuters reported.
Meta shares rose 4.4% in pre-market trading.
Broader litigation context
The claims were part of a broader wave of litigation brought by states, local governments, school districts and individuals alleging Meta and other social media companies fuelled a nationwide youth mental health crisis.
The federal trial covered claims from California, Colorado, Kentucky and New Jersey that Meta violated their state laws protecting consumers. It also covered claims from 29 states that Meta violated the federal Children's Online Privacy Protection Act by collecting personal data from users it knew were children without parental notification or consent, and using the data to train machine learning and generative AI models.
Meta's denial and penalties sought
Meta, based in California, has denied the allegations, saying it has worked hard to protect children on its platforms. The company has argued it could not have misled consumers about whether its services were addictive because "social media addiction" is not a recognised psychiatric condition.
In a filing before the trial, Meta said California, Colorado, Kentucky and New Jersey were seeking up to $1.4tn in penalties. The states suggested before the trial began that the figure would be closer to $200bn. The states were also seeking additional monetary damages, plus an order directing Meta to make major changes to its platforms and to bar children from creating accounts.
