WASHINGTON: Meta Platforms has agreed to pay up to $16.68 billion and introduce stricter protections for young users to settle claims brought by U.S. states over the alleged impact of Facebook and Instagram on children.
The settlement, announced Wednesday, resolves claims from 29 U.S. states and avoids a closely watched federal trial in California over allegations that Meta designed its platforms to encourage addictive use, misled consumers about safety and improperly collected personal information from children.
Under the agreement, Meta will introduce daily usage limits for children using Facebook and Instagram and impose restrictions on nighttime access. The company will also strengthen measures aimed at preventing children from viewing content restricted by age.
Meta, headquartered in Menlo Park, California, denied wrongdoing as part of the settlement.
The agreement also resolves separate privacy-related lawsuits filed by California, Illinois, New Mexico and Washington, D.C., connected to the Cambridge Analytica scandal. The four jurisdictions will receive a combined $459.3 million under the settlement.
Meta shares gained about 2.3% in early trading following news of the agreement.
Social Media and Youth Mental Health
The settlement comes amid a much wider legal battle over the role of social media in children’s mental health.
Meta, along with Snap, Alphabet’s YouTube and TikTok parent ByteDance, continues to face thousands of lawsuits filed by states, local governments, school districts and individuals. The cases accuse social media companies of knowingly developing features that encourage excessive or addictive use among children and teenagers.
The federal litigation has been consolidated in Oakland, California, where U.S. District Judge Yvonne Gonzalez Rogers is overseeing cases involving individuals, school districts and state governments.
The trial covered claims from California, Colorado, Kentucky and New Jersey alleging violations of state consumer-protection laws. It also included claims that Meta violated the federal Children’s Online Privacy Protection Act by collecting information from users it knew were children without appropriate parental notification or consent.
The states further alleged that the information was used to train machine-learning and generative artificial intelligence systems.
Meta has previously argued that it could not have deceived consumers by describing its services as addictive because “social media addiction” is not formally recognized as a psychiatric disorder.
Growing Legal Pressure on Meta
The financial settlement comes after several significant legal setbacks for Meta.
Earlier this year, a New Mexico jury ordered the company to pay $375 million after finding that Meta had misled consumers about the safety of its platforms. In August, a judge separately ordered Meta to pay another $567 million and implement additional youth-safety measures after finding that the company had created a public nuisance.
In another landmark case in March, a Los Angeles jury found Meta and Google liable in a lawsuit brought by an individual who alleged that social media use contributed to depression and anxiety. The companies were ordered to pay a combined $6 million in damages and have said they will appeal the verdict.
The latest settlement represents one of the largest legal resolutions involving allegations that social media platforms contributed to harm among young users.
For Meta, the agreement also places greater emphasis on platform controls, parental protections and limits on children’s access as governments and courts continue to scrutinize the impact of social media on minors.