Meta agrees to $17B settlement in landmark child-safety case

Meta, the parent company of Facebook and Instagram, has agreed to a $16.68 billion settlement over concerns about the harms caused by its social media platforms, particularly to children and young users. The settlement includes daily usage limits and nighttime restrictions for minors, as well as stricter measures to block access to age-restricted content. Meta denied any wrongdoing in agreeing to the settlement.

The deal resolves lawsuits from four U.S. states - California, Illinois, New Mexico, and Washington, D.C. - as well as privacy claims related to the Cambridge Analytica scandal. The states will receive a total of $459.3 million from the settlement. This settlement is part of a larger trend of legal action against social media companies, which have faced numerous lawsuits alleging they contributed to a youth mental health crisis.

The trial in Oakland, California, heard claims from California, Colorado, Kentucky, and New Jersey that Meta violated their consumer protection laws. It also addressed allegations that Meta violated the federal Children's Online Privacy Protection Act by collecting personal data from users it knew were children without parental consent, and using that data to train machine learning and AI models. Before the trial began, the states involved had demanded penalties ranging from $1.4 trillion to $200 billion.

Meta argued it could not be held responsible for claims of addiction because "social media addiction" is not recognized as a psychiatric condition. The trial began on August 18 and was consolidated under the jurisdiction of US District Judge Yvonne Gonzalez Rogers in Oakland. The federal cases included lawsuits from individuals, school districts, and state governments. Meta's stock rose by 2.3% in early trading following the announcement of the settlement.