Meta, the parent company of Facebook and Instagram, has agreed to pay up to $16.68bn to settle claims brought by states that the company designed its platforms to addict children, misled consumers about safety, and improperly collected personal data from child users, according to court papers.
The settlement was reached during a California federal trial over claims from 29 states, avoiding a major test of allegations that social media companies harmed young users.
Meta also agreed to introduce changes for teenage users nationwide, including daily usage limits and nighttime blocks, according to the filing, as reported by Reuters.
Meta shares rose 4.4% in pre-market trading.
The claims were part of a broader wave of litigation from states, local governments, school districts and individuals accusing Meta and other social media companies of fuelling a youth mental health crisis.
The federal trial covered claims from California, Colorado, Kentucky and New Jersey that Meta violated their consumer protection laws. 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 that data to train machine learning and generative AI models.
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 the four states were seeking up to $1.4tn in penalties. The states suggested before the trial began that the figure would be closer to $200bn. They were also seeking additional monetary damages and an order directing Meta to make major changes to its platforms and to bar children from creating accounts.
