Settled matter, Meta to pay $18 billion in mass social media settlement

Meta Platforms has agreed to pay roughly $18 billion to settle claims from a 29-state coalition of attorneys general that its platforms caused harm to children. Shares of Meta (NASDAQ: META) rose more than 4% in pre-market trading on the news, a reaction that underscores how investors view a negotiated settlement as materially preferable to an open-ended jury verdict. However, shares later gave up gains to trade flat as more details about the settlement came to light, including potential caps on usage.

The deal, reached mid-trial, resolves allegations that Meta deliberately engineered Facebook and Instagram to be addictive to minors and harvested personal data from children without parental consent, in violation of the federal Children’s Online Privacy Protection Act (COPPA). The states also alleged, per Reuters, that Meta used minors’ data to train machine learning and generative AI models without notifying or obtaining consent from parents.

Under the terms of the deal, Meta will pay up to $18 billion over a 10-year period. California alone stands to receive between $1.5 billion and $2.1 billion, with proceeds earmarked for state legislative initiatives targeting the prevention and treatment of youth mental health conditions tied to online usage.