Meta reaches $16.68B settlement with states over social media harms to children, and agrees to teenage safeguards including daily usage limits

Meta has reached a massive settlement to resolve claims that it harmed young users through its social media platforms. The company agreed to pay a maximum of $16.68 billion to settle allegations from 29 states that it designed Facebook and Instagram to be addictive, misled consumers about safety, and improperly gathered personal data from children, Reuters reported.

This deal brings an end to a high-profile federal trial in an Oakland, California court that had been testing claims about the impact of social media on youth mental health. It is a significant move for the tech giant, even though the company denied any wrongdoing as part of the agreement.

While the total figure is substantial, it is worth noting that before the trial kicked off on August 18, the states involved had discussed potential penalties ranging from $200 billion to as much as $1.4 trillion. Investors seem to have reacted positively to the news, as shares of Meta rose 2.3% in early trading following the announcement.

Beyond the financial payout, Meta has committed to some major changes to how younger users experience its apps

The company will now implement daily usage limits and restrict nighttime access for children on Facebook and Instagram. It is also rolling out enhanced measures designed to keep minors from viewing age-restricted content.

The scope of this legal battle was quite broad. It covered claims that Meta violated the federal Children’s Online Privacy Protection Act by collecting data from children without parental consent. The states alleged that this data was used to train machine learning and generative AI models. Meta has consistently pushed back on the idea that it misled users about addictive qualities, arguing that “social media addiction” is not a recognized psychiatric condition.

This settlement also addresses separate privacy issues. The states of California, Illinois, New Mexico, and Washington, D.C., will receive $459.3 million to resolve lawsuits stemming from the Cambridge Analytica scandal. That particular case involved the unauthorized collection of personal data from millions of users.

While this chapter is closing, Meta is not out of the woods yet. The company still faces thousands of other lawsuits in various state and federal courts from school districts, local governments, and individuals. These ongoing cases continue to argue that companies like Meta, along with others like Alphabet, Snap, and ByteDance, have knowingly designed their platforms to fuel a national youth mental health crisis. For instance, a trial in Nashville regarding claims brought by Tennessee against Meta actually began last month.

The legal pressure has been mounting for some time. Earlier this year, a jury in New Mexico ordered Meta to pay $375 million after finding the company misled consumers about the safety of its services. On August 6, a judge went further by ruling that Meta had created a public nuisance, ordering an additional $567 million payment and requiring the implementation of new youth-safety measures. Meta has stated it plans to appeal these earlier verdicts.

In another case, a Los Angeles jury found both Meta and Google liable for a plaintiff’s depression and anxiety, awarding $6 million in damages.