Meta ordered to pay $25 billion in New Mexico privacy case

MUMBAI: Meta’s privacy bill has just acquired a staggering number of zeroes. A New Mexico judge has ordered the social media giant to pay $25 billion after upholding a jury’s findings that the company misled consumers about data privacy and other issues, delivering one of the largest financial penalties in US corporate history.

Judge Francis Mathew issued the order on Wednesday, more than three weeks after a jury found that Meta had made 26 misleading statements concerning data privacy, hate speech and other matters. The statements potentially reached millions of people and amounted to more than 43 million violations of New Mexico’s consumer protection laws, according to the findings.

The penalty could have been considerably larger. Mathew said state law could have supported a fine exceeding $219 billion, but reduced the amount to $25 billion. Even after the reduction, the figure represents an extraordinary financial and reputational blow for a company whose business depends heavily on collecting user data and using it to power targeted advertising.

Meta, however, is not accepting the verdict quietly. The company has said it is confident of prevailing on appeal, arguing that the ruling and the state attorney general’s approach would make it difficult to operate in New Mexico.

“This ruling, and the Attorney General’s approach to this enforcement, makes it all but impossible to do business in the state of New Mexico,” Meta chief legal officer C.J. Mahoney said. He argued that the lawsuit sought to impose a tax on speech by introducing new rules governing what people could say online.

Mahoney added that Meta would continue building what it described as a safe and free platform to connect millions of Americans, support small businesses and help the US maintain its competitive edge.

New Mexico attorney general Raúl Torrez, meanwhile, called the penalty one of the largest financial sanctions imposed on a corporation in US history. The dispute centres on allegations that Meta misled users about who could access their personal information and how the company dealt with harmful content on its platforms.

The lawsuit was filed in 2021 following revelations about Cambridge Analytica, the now-defunct British political consulting firm that obtained personal data from as many as 87 million Facebook users through a third-party application without their consent. The data was used for voter profiling and targeting, triggering a global backlash over Facebook’s privacy practices.

New Mexico alleged that Meta knew third parties had broad access to users’ information and misled consumers about how their data was handled. The state also accused the company of tolerating hate speech and misinformation when doing so benefited its business.

Meta disputed the allegations, arguing in court filings that it did not sell user data and that the state had failed to demonstrate that consumers were actually misled. The company had urged the judge to cap the penalties at $3.45 billion, substantially below the amount ultimately ordered.

The penalty also exceeds the range sought by New Mexico’s lawyers during a hearing on 1 October. According to Reuters, the state had sought a financial sanction of between $35 billion and $40 billion. The judge ultimately set the amount at $25 billion, despite noting that the law could have supported a penalty exceeding $219 billion.

The case follows a $5 billion penalty imposed on Meta by the US Federal Trade Commission in 2019 over the Cambridge Analytica scandal. The latest order puts renewed focus on the long-running consequences of that episode, which raised questions about the safeguards surrounding personal data collected through social media platforms.

For Meta, the New Mexico ruling is also part of a wider legal battle over user safety and the impact of its services on young people. Earlier this year, the state secured a total of $942 million across two trials involving allegations that Meta facilitated the sexual exploitation of young people on Instagram and Facebook and misled consumers about platform safety.

The company also faces thousands of lawsuits and scrutiny from lawmakers over the effects of Instagram and Facebook on teenagers’ mental health, with another trial expected to begin the following week, according to the supplied report.

Separately, six other states reached a multistate settlement with Meta in August, resolving claims linked to allegations that the company’s platforms had harmed teen mental health. The settlement totalled $459.2 million.

Together, the cases illustrate the growing financial and legal risks facing social media companies over the way they collect information, moderate content and protect younger users. While Meta’s advertising business continues to generate substantial revenue, legal disputes over privacy and safety have become an increasingly significant part of its operating environment.

The $25 billion order is not necessarily the final word, with Meta promising to challenge the ruling on appeal. The outcome of that process will determine whether the penalty stands, changes or is overturned.

For now, the case puts a hefty price tag on the dispute over how far a social media company’s responsibility extends when it comes to users’ data and safety. Meta may be preparing its next legal move, but the New Mexico verdict has ensured that its privacy record remains firmly in the spotlight.