Meta Platforms agreed to pay a maximum of $16.68 billion as part of a settlement to resolve lawsuits filed by several U.S. states, which alleged that the company designed Facebook and Instagram to create addiction in children, misled consumers about their safety, and improperly collected personal data from minors using its platforms, according to a court document released on Wednesday.
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The settlement was reached during a federal trial in California over lawsuits filed by 29 states, thus avoiding one of the most high-profile trials to date over allegations that social media companies harmed young users, Reuters reported.
The company agreed to establish safety measures for teenage users, including daily usage limits and nighttime blocks across the United States.
The jury trial, which took place in a federal court in Oakland, California, began with opening statements last week. California has joined 28 other U.S. states in suing the company, valued at $1.36 trillion, for allegedly designing addictive products that harm children. The states further alleged that the social media company routinely collected data from children under 13 without parental consent, in violation of federal and state laws.
Legal experts stated that the outcome of this trial could radically change how social media applications work for young people, The Guardian newspaper highlighted.
The Menlo Park, California-based company denied wrongdoing by agreeing to the settlement. Meta has rejected the allegations, stating that it has strived to protect minors on its platforms. The company argued that it could not have misled consumers about potential addiction to its services, as “social media addiction” is not a recognized psychiatric condition.
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Meta shares rose 4.4% in pre-market trading.
In a document filed before the trial, Meta stated that California, Colorado, Kentucky, and New Jersey were seeking fines of up to $1.4 trillion. Before the trial began, the states had suggested the figure would be closer to $200 billion. Additionally, they sought further financial compensation, as well as a court order compelling Meta to make significant changes to its platforms and prevent minors from creating accounts.
The trial was expected to last between six and eight weeks. The proceedings will be handled by attorneys from the states of California, Colorado, Kentucky, and New Jersey. The jury will have an advisory role, meaning it will present recommendations to Judge Yvonne Gonzalez Rogers, who will issue the final ruling on the verdict and compensation.
Meta faces thousands of similar lawsuits in the United States filed by families, school districts, and other attorneys general. The company lost the first two cases that went to trial in March. In the first, it was ordered to pay nearly a billion dollars to the state of New Mexico for allowing child sexual exploitation on its platforms; and in the second, it was found responsible for deliberately designing addictive products that created addiction in a young woman and was ordered to pay her more than four million dollars.
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