Meta faces $1.4 billion in damages in a social media addiction case brought by four states.
Thirty-three states have joined together to sue Meta, alleging that the company was exploit their young users on Instagram and Facebook for profit, including by collecting data from children without parental consent. Four of those states (California, New Jersey, Colorado and Kentucky) also claim that the company misled consumers about the platforms’ addictive design features, causing mental health problems in children who became hooked from a young age.
The damages sought by those four states total a whopping $1.4 trillion, Meta said in a recent court filing, a figure that would supposedly rise even further with the other penalties the attorneys general are seeking to add. The figure is high by many standards, but especially when compared to the company’s market capitalization, which is just above $1.5 trillion.
Meta has denied the allegations and recently tried but failed to obtain addiction allegations. dismissed. In the latest court filing, Meta’s lawyers argued that the $1.4 billion in damages were unfounded and disproportionate.
“Meta has found no case, under any cause of action, in which a defendant has been ordered to pay more than $1 billion, or anything remotely close to that staggering figure,” the attorneys say.
The states’ filings are sealed, but for ReutersPenalties were calculated by multiplying the number of violations, also known as the approximate number of young users affected by addictive design options, by the fine amounts designated by state law.
Meta maintains that the figure is so high that it is unparalleled “in the history of consumer protection law enforcement.”
“In fact, the Federal Trade Commission recently described a ‘billion-dollar penalty’ as the ‘largest ever in a case involving a violation of FTC rules,’” the document states. “Prosecutors’ demand exceeds even those record figures by several orders of magnitude, and is grossly disproportionate to the specified violations alleged here.”
The case will go to court in August, and if the judge rules against Meta, it could be a substantial financial problem for the company. For months now, Meta executives have accepted to investors who were anticipating some material losses this year due to “scrutiny of youth-related issues.” But the $1.4 trillion figure was unknown until now and is far from the only youth-related headache the tech giant is bracing for.
Meta has been plagued by assembly litigation for alleged deceptive practices on social networks aimed at young users. In a decisive verdict issued earlier this year, a judge found Meta and Google liable and ordered them to pay $6 million in damages to a 20-year-old woman who said deliberate addictive design features on social media platforms like Instagram hooked her from a young age and exacerbated mental health problems such as depression and anxiety. Before that ruling, platform operators were protected from liability for third-party content under Section 230 of the Communications Decency Act.
The March verdict precisely marked the beginning of Meta’s legal problems. The company still has more than 3,000 similar cases pending in California state court. 14 other states have also filed lawsuits similar to the one filed by the four states, and the case will go to trial early next year.
