Meta agrees to $16.68 bn settlement in US youth safety case

MUMBAI: Meta’s attention economy has come with a hefty price tag. The company has agreed to pay as much as $16.68 billion to settle claims by US states that Facebook and Instagram were designed to encourage addictive use among children, misled consumers about platform safety and improperly collected data from underage users.

The settlement, reached during a federal trial in California, brings an end to one of the most closely watched legal challenges over social media’s impact on children and teenagers, according to Reuters.

Beyond the financial hit, the agreement will bring changes to how teenage users access Facebook and Instagram in the US. Court filings show that Meta will introduce daily usage limits and night-time blocks for teenagers.

Meta, headquartered in Menlo Park, California, has denied wrongdoing as part of the settlement.

The trial involved claims brought by California, Colorado, Kentucky and New Jersey, which accused Meta of violating state consumer protection laws. Separately, 29 states alleged that the company breached the federal Children’s Online Privacy Protection Act (COPPA) by collecting personal information from users it knew were children without parental notification or consent.

The states also alleged that the information was used to train machine-learning and generative AI models.

Meta has consistently rejected the allegations and argued that it has taken steps to protect younger users. Before the trial, the company also disputed claims that it had misled consumers by describing its services as addictive, arguing that “social media addiction” is not recognised as a psychiatric condition.

The stakes had initially looked far higher. Meta had told the court that the four states could seek penalties of as much as $1.4 trillion, although the states had previously indicated a figure closer to $200 billion. They were also seeking additional damages and court orders that could have forced major changes to Meta’s platforms, including restrictions on children creating accounts.

The settlement comes against a much wider legal reckoning for the social media industry. Meta, Snap, Alphabet’s YouTube and ByteDance’s TikTok are facing thousands of lawsuits in US federal and state courts over allegations that their platforms were deliberately designed with features encouraging addictive use among young people.

Federal cases have been consolidated before US District Judge Yvonne Gonzalez Rogers in Oakland, covering lawsuits brought by individuals, school districts and state governments. Thousands of additional cases remain pending in state courts, while around 30 states have separately sued the companies in state-level proceedings.

Meta’s latest settlement also follows losses for the company in other youth-safety cases, adding to the pressure on social media platforms to rethink how their products are designed and how younger users are protected.