Meta is facing $1.4 trillion in damages in a social media addiction case brought by four states.
Thirty-three states have banded together to sue Meta, alleging that the company was exploiting its young users on Instagram and Facebook for profit, including by collecting data from children without parental consent. Four of those states—California, New Jersey, Colorado and Kentucky—also claim that the company misled consumers about the addictive design features on the platforms, thereby causing mental health problems in children who got hooked from an early age.
The damages requested by those four states add up to a whopping $1.4 trillion, Meta said in a recent court filing, a figure that would allegedly go even higher with the other penalties the attorneys general seek to add. The number is high by many standards but especially when compared to the company’s market capitalization, which is just above $1.5 trillion.
Meta has denied the allegations, and recently attempted yet failed to get the addiction claims dismissed. In the latest court submission, the attorneys for Meta argued that the $1.4 trillion in damages was unsubstantiated and disproportionate.
“Meta has not found any case, under any cause of action, where one defendant was ordered to pay over one trillion dollars—or any number remotely close to that staggering figure,” the attorneys claim.
The states’ filings are sealed, but per Reuters, the penalties were calculated by multiplying the number of violations, aka the rough amount of young users impacted by the addictive design choices, by the fine amounts designated by state law.
Meta argues that the number is so high that it has no parallel “in the history of consumer protection enforcement.”
“Indeed, the Federal Trade Commission recently described a ‘$1 billion penalty’ as the ‘largest ever in a case involving an FTC rule violation,’” the filing states. “The AGs’ demand exceeds even those record figures by several orders of magnitude, and is in gross disproportion to the specified violations alleged here.”
The case is now going to court in August, and if the judge rules against Meta, it could prove to be a substantial financial problem for the company. For months now, Meta executives have admitted to investors that they were anticipating some material loss this year due to “scrutiny on youth-related issues.” But the $1.4 trillion number was previously unknown, and it is far from the only youth-related headache the tech giant is bracing for.
Meta has been plagued with mounting litigation over alleged deceptive social media practices targeting young users. In a watershed verdict delivered earlier this year, a judge found Meta and Google liable and ordered them to pay $6 million in damages to a now 20-year-old who said that deliberate addictive design features on social media platforms like Instagram got her hooked from a young age and exacerbated mental health problems like depression and anxiety. Prior to that verdict, platform operators were protected from liability for third-party content under Section 230 of the Communications Decency Act.
The March verdict marked just the beginning of Meta’s legal troubles. The company still has more than 3,000 similar cases pending in California state court. Another 14 states have also brought claims similar to the one led by the four states, with the case set to go to trial early next year.
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