Meta Platforms has agreed to pay up to $18 billion over the next decade and make significant changes to Facebook and Instagram to settle claims by US states that it designed the platforms to addict children, misled consumers about their safety and improperly collected children’s personal data.
The headline figure combines several settlements: a maximum of about $16.7 billion to 47 states, Washington, D.C., Puerto Rico, American Samoa and the Northern Mariana Islands; a separate Texas settlement worth more than $1 billion; and $459 million resolving privacy claims arising from the Cambridge Analytica scandal.
The agreement, reached with nearly all US states, ends a federal trial that had become one of the most closely watched tests of allegations that social media companies harmed young users, NewsFirst reported, carrying Reuters copy.
What changes for users
Under the settlement, Meta will impose daily usage limits and restrict nighttime use by children on Facebook and Instagram, and strengthen measures to stop children reaching age-restricted content.
These are product changes rather than a purely financial penalty, and they apply to the platforms as operated, not only in the states that sued. The Menlo Park company denied wrongdoing in agreeing to settle. Its shares rose 2.3% in early trading.
The claims
The trial, in the federal court in Oakland, California, covered claims from California, Colorado, Kentucky and New Jersey that Meta violated their consumer protection laws.
It also covered claims from 29 states that Meta breached the federal Children’s Online Privacy Protection Act by collecting personal data from users it knew were children, without notifying or obtaining consent from parents, and using that data to train machine learning and generative AI models.
Meta has consistently argued it could not have misled consumers about whether its services were addictive, on the grounds that “social media addiction” is not a recognised psychiatric condition.
The settlement also resolves separate lawsuits by California, Illinois, New Mexico and Washington, D.C. over privacy claims arising from the Cambridge Analytica scandal, in which the consulting firm harvested the personal data of millions of Facebook users. Those jurisdictions will receive $459.3 million.
Scale, and what remains
The sum is far below what the states had been seeking. Before the trial opened on August 18, Meta said California, Colorado, Kentucky and New Jersey were pursuing up to $1.4 trillion in penalties; the states put the likely figure closer to $200 billion. The agreed maximum of $16.68 billion is a fraction of either.
The litigation is not over. Meta, Snap, Alphabet’s YouTube and ByteDance’s TikTok still face thousands of lawsuits in federal and state courts alleging they knowingly built features that addict children and teenagers. A separate trial over claims brought by Tennessee against Meta began last month in Nashville. The consolidated federal cases, before US District Judge Yvonne Gonzalez Rogers in Oakland, include suits filed by individuals, school districts and state governments.
Update — August 27: the terms in detail
Fuller Reuters copy carried by the Daily Mirror has set out what the product changes actually require.
Meta will restrict teenagers’ use of Facebook and Instagram to two hours a day and block all use between midnight and 6 a.m. without parental consent. It will also disable most push notifications to teenage users during school hours, defined as 8 a.m. to 3 p.m.
Those limits could be tightened further if Snapchat, TikTok and YouTube adopt similar terms. The payment structure is built around the same lever: about $12.7 billion is guaranteed, with a further $5 billion contingent on whether those three rivals impose comparable protections for children. Meta said it would publish a letter in national newspapers pressing TikTok and YouTube to follow.
The settlement stops well short of a structural overhaul. It does not require Meta to abandon personalised recommendations or targeted advertising, and it does not address content that Meta’s own researchers identified as harmful, including posts that made Instagram users uncomfortable with their body image. The total payout represents roughly three to four months of Meta’s profit and about one month of revenue.
US District Judge Yvonne Gonzalez Rogers approved the main settlement late on Wednesday, calling it “a good step forward” and telling both sides: “I am quite happy to not have to finish up this trial.” Instagram head Adam Mosseri had begun testifying when the settlement was announced, and chief executive Mark Zuckerberg had been expected to take the stand.
California could receive $2.2 billion and New York $1.1 billion. Some states will place the money in general accounts, while others have earmarked portions for children’s mental health.
“The focus of this case was to protect our kids,” Colorado Attorney General Phil Weiser said. “The relief we are getting in this settlement is very meaningful and well beyond what any court has ordered or is likely to order.”
