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Meta says the penalty claim is without precedent

By Mark Huffman of ConsumerAffairs

• Four states are seeking $1.4 trillion in penalties from Meta, alleging Facebook and Instagram were deliberately designed to addict young users.

• The amount, disclosed by Meta in a court filing, is nearly equal to the company's roughly $1.5 trillion market value.

• The case, brought by California, Colorado, Kentucky and New Jersey, is scheduled for trial in August in federal court in Oakland, California.

Meta Platforms has revealed that it could face an unprecedented $1.4 trillion in penalties if four states prevail in a lawsuit. The complaint accuses the company of designing Facebook and Instagram to be addictive to children and misleading the public about the risks those platforms pose to young users.

The eye-popping figure emerged in a court filing ahead of a trial scheduled to begin in August in federal court in Oakland, Calif. According to Meta, attorneys general from California, Colorado, Kentucky and New Jersey have proposed penalty calculations that could total approximately $1.4 trillion if they succeed on their claims.

The lawsuit is part of a legal campaign against Meta and other social media companies over allegations that they intentionally engineered platforms to maximize engagement among minors while downplaying or concealing evidence that excessive use could contribute to anxiety, depression, self-harm and other mental health problems.

Without precedent

Meta said the proposed penalties are without precedent in consumer protection law and argued that the states' methodology improperly counts the same users multiple times. In its filing, the company described the requested sanctions as unsupported by the evidence and legally flawed.

The states allege that Meta violated consumer protection laws and the federal Children's Online Privacy Protection Act by collecting data from children and teenagers without proper consent while promoting platforms they say were deliberately designed to keep young users engaged through features such as algorithmic recommendations and infinite scrolling.

The $1.4 trillion figure is especially notable because it is close to Meta's current market capitalization, estimated at about $1.5 trillion. While legal experts say such headline figures often represent the maximum theoretical penalties rather than likely outcomes, the disclosure underscores the enormous financial stakes facing the company.

A high-profile case

The upcoming trial is one of the highest-profile cases in a growing wave of litigation against social media companies. More than 2,000 lawsuits have been filed by states, school districts, families and other plaintiffs alleging that social media platforms contributed to a youth mental health crisis by prioritizing user engagement over safety.

Meta has consistently denied wrongdoing, saying it has invested heavily in parental controls, teen safety features and other protections. The company also argues that many of the challenged features are protected under Section 230 of the Communications Act and that the states' legal theories overreach.

The trial is expected to begin in August before U.S. District Judge Yvonne Gonzalez Rogers in Oakland and could become one of the most consequential legal battles yet over the responsibility of social media companies for the effects of their products on children and teenagers.