According to news on July 6, social media giant Meta Platform said in a court document filed on Monday that four states in the United States, California, Colorado, Kentucky and New Jersey, are seeking a total of about $1.4 trillion in fines under state laws, accusing the company of intentionally making young users addicted when designing the Facebook and Instagram platforms and misleading the public on platform safety issues.
Meta provided the amount in the filing in response to previous arguments submitted by several state attorneys general on how the fine should be calculated if the case were successful at trial.
The size of the fine, which has never been publicly disclosed before, is close to Meta's current market capitalization of about $1.5 trillion. A trial is expected to begin in August in Oakland, California, where the four-state lawsuit will be heard by U.S. District Judge Yvonne Gonzalez Rogers along with other cases alleging Meta violated the federal Children's Online Privacy Protection Act. Meta said in the filing that the amount of the fine was not supported by evidence and that "sanctions of this magnitude have no comparable case in the history of consumer protection enforcement." As of shortly after the filing, representatives from several state attorneys general had yet to publicly respond.
According to previous court hearings, the method of calculating fines in several states has been sealed, but it said at a hearing in June that fines are calculated by multiplying the number of violations by the single fine under each state's law. The so-called number of violations is based on the estimated number of teenagers and young users affected by Meta's behavior. A total of 29 states have sued Meta in federal court, most of which accuse the company of violating the Children's Online Privacy Protection Act by collecting children's data without obtaining appropriate parental consent. The August trial will focus on all charges under that federal law, as well as related claims brought by the four states under consumer protection laws, accusing Meta of misleading users about platform security.
Meta denies the accusations, saying state attorneys general have no evidence that the company misled consumers about the alleged "addictiveness" of the platform. One of Meta's arguments is that "social media addiction" has not yet been established as a formal diagnosis by the psychiatric community, so the company's representation that the platform is "not addictive" cannot be found to be false. In addition to the four-state lawsuit, 14 other states have filed similar claims under their own laws, and that portion of the case will be heard in a separate court next February.
In late June of this year, Judge Rogers dismissed Meta's application to have the trial thrown out. The judge noted that there are still several factual disputes that need to be clarified through trial, including whether Meta's social platform is addictive, whether the company has falsely denied that it intentionally designed it to be so, and whether the platform has a certain degree of specific orientation for child users. California Attorney General Rob Bonta said after the ruling that Meta violated consumer protection laws by putting profits over children's safety and pledged to hold the company "fully accountable" for its role in the youth mental health crisis.
Meta, Snapchat and its parent Snap Inc., YouTube and its parent Alphabet Inc., and TikTok and its parent ByteDance currently face thousands of lawsuits in federal and state courts. The cases generally allege that companies knowingly designed platform features to be "addictive" to children and teenagers, thereby exacerbating the youth mental health crisis. States in the United States have successively filed lawsuits against these technology companies, some of which were included in the consolidated cases presided over by Judge Rogers, and some were tried separately in their respective state courts.
New Mexico is the first state in such a case to go to trial. In March, a local jury found that Meta misled New Mexico consumers and ordered the company to pay $375 million in damages. The second phase of the New Mexico case is currently being heard by a local judge, which in addition to seeking additional compensation, also requires the court to sign an order requiring Meta to make a series of changes to the Instagram, Facebook and WhatsApp platforms. As U.S. states continue to put pressure on youth online safety and platform addiction, the upcoming California federal trial in August and the $1.4 trillion fine request from four states are seen as a key bellwether in this wave of regulatory and judicial actions.