Meta explores settlement in US case over teen social media use

MUMBAI: Meta may be looking for a way to scroll past its biggest legal headache yet. The company is reportedly exploring a settlement with US state attorneys general in a federal case alleging that Facebook and Instagram were designed to encourage compulsive use among teenagers, according to a Bloomberg report.

The discussions are taking place during the second week of the trial in federal court in Oakland, California, people familiar with the matter told Bloomberg. The negotiations are private, and no settlement has been publicly confirmed.

The case involves attorneys general from 29 states, who have accused Meta of violating consumer protection and privacy laws by developing features that allegedly encouraged young users to spend more time on its platforms. The states have also argued that Meta did not adequately disclose the risks associated with those features.

Meta has rejected the allegations and argued that the states are seeking excessive penalties and sweeping changes to its products.

The financial stakes are particularly striking. According to calculations cited by Meta during the proceedings, the company could face potential liability of about $1.4 trillion if it loses the case. A settlement could potentially resolve the dispute for a substantially lower amount, although no details of the reported negotiations have been disclosed.

The trial has already heard testimony from Instagram chief Adam Mosseri, alongside current and former Meta employees involved in developing its platforms and researching how young users interact with them. Meta CEO Mark Zuckerberg could also testify, according to lawyers involved in the proceedings.

California, Colorado, Kentucky and New Jersey are leading the litigation. They allege that Meta understood the potential risks of prolonged platform use among young people but continued operating features that encouraged engagement.

Separately, the wider group of 29 states has accused Meta of improperly collecting information from children under 13, alleging violations of the US Children’s Online Privacy Protection Act.

The case comes amid intensifying scrutiny of social media companies over their impact on children and teenagers. Google parent Alphabet, Snap and TikTok are also facing thousands of claims in the US from individuals, families and educational institutions over alleged harms to young users.

For Meta, a settlement could bring the current trial to a close while reducing the uncertainty surrounding both potential financial penalties and changes to its platform design. But any agreement would still have to address the states’ demands over how the company’s services are designed and how younger users are protected.

For now, however, the legal battle is still very much live and with $1.4 trillion potentially hanging over it, the stakes are anything but social-media small.