Meta Pays $16.7 Billion in Teen Safety Settlement

Meta Platforms has agreed to pay up to $16.7 billion (roughly 15.4 billion euros) to states across the United States over how it designed Facebook and Instagram for underage users. A court filing on Wednesday, August 26, closed out a trial before the US District Court for the Northern District of California, in Oakland. The case was heard as People of the State of California v. Meta Platforms Inc., No. 23-cv-05448.

The suit was brought by 29 states, led by California, Colorado, Kentucky and New Jersey. State attorneys general argued that the company deliberately built platforms that hook young users, misled the public about the risks to children, and unlawfully collected data on users under 13.

The $16.7 billion figure covers the main claim from the Oakland trial. On top of it comes $459 million (roughly 422 million euros) for separate privacy claims and $75 million (roughly 69 million euros) in attorney fees. Texas negotiated a separate $1 billion (roughly 920 million euros) arrangement, pushing the total, according to Techxplore, as high as $18 billion (roughly 16.6 billion euros). Insurance Journal puts the formal obligation without the Texas piece at $17.1 billion if other platforms sign on to the same rules, while the baseline obligation without that condition is $12.19 billion (roughly 11.2 billion euros) over ten years, payable in ten annual installments.

California is the single largest recipient, drawing $1.5 to $2.1 billion (roughly 1.4 to 1.9 billion euros) over the decade, followed by New York with up to $1.13 billion (roughly 1.04 billion euros). Meta has not admitted wrongdoing. The filing states that the settlement is not an admission of liability, and the deal still awaits court approval.

What Changes for Teens

The financial side of the settlement is the smaller story. The bigger one is the list of new restrictions Meta is rolling out for underage users of Facebook and Instagram. The apps will automatically lock teens out from midnight to 6 a.m. local time. The daily cap is two hours of combined use across all Meta apps, with time spent messaging or watching longer videos excluded from that limit.

If rival platforms adopt the same rules, the terms tighten further: the overnight lockout shifts to a window between 10 p.m. and 7 a.m., and the daily limit drops to 60 minutes per individual app, with an overall two hour ceiling.

Teens will not be able to turn off safety settings without parental consent. Notifications are automatically muted during school hours. Access to like counts on posts, as well as to beautifying filters, is restricted for all users under 18. An independent monitor, chosen jointly by Meta and the states and paid for by the company, will track compliance with these rules for ten years.

Reactions

“Meta has agreed to make sweeping changes that will reduce the risk of harm from its platforms,” Rob Bonta, California’s attorney general, said after the settlement was filed.

The company struck a similar tone in its own statement. “Making sure teens have a safe and positive experience on our platforms is an absolute imperative for us,” Meta said in a statement accompanying the settlement.

A Risk Bigger Than the Settlement

Had the Oakland trial gone against it, Meta’s exposure, by its own estimates, would have been far larger than the agreed sum. Techxplore reports the penalty could have topped $1 trillion, while Insurance Journal, citing Bloomberg, puts the figure as high as $1.4 trillion, close to the company’s market capitalization. The trial broke off in its second week after Instagram head Adam Moseri, testifying on Tuesday, admitted he had publicly praised new teen safety tools without disclosing the low usage rates found in earlier internal testing. Other witnesses testified the previous week that the company knew the tools did not work, and even said, in their words, that they had been “designed to fail”. Founder and CEO Mark Zuckerberg had been expected to testify, but never did, since the settlement was reached before that happened.

James Grimmelmann, a professor of digital and information law at Cornell University, placed the settlement in a wider context.

“Meta is now facing the same uncomfortable truth as manufacturers of Agent Orange, asbestos and other dangerous products. If you’re liable at all, the lawsuits are going to keep coming.”

He added that settling with the states lets the company cap its total exposure and clear some of the largest plaintiffs out of its path.

The New Mexico Precedent

The Oakland settlement is not the first of its kind for Meta. A state court judge in Santa Fe, ruling earlier in a lawsuit brought by New Mexico’s attorney general, compared the company to a polluting factory and ordered it to pay roughly $375 million (about 345 million euros) in civil penalties plus $567 million (about 522 million euros) to mitigate harm to young users in that state, close to $1 billion in total. In March, a Los Angeles jury awarded $6 million (about 5.5 million euros) to a 20 year old woman who claimed that more than a decade of continuous use of Instagram and YouTube had caused her anxiety, depression and body image disorder. It was the first time an argument centered on product design, rather than content, had succeeded before a jury.

Meta’s stock rose about 2.2% on the New York exchange after the settlement was announced.

What Remains Open

Meta is still facing more than 3,000 individual personal injury lawsuits and roughly 1,300 school district lawsuits across the United States, alongside similar suits against Google parent Alphabet, Snap and TikTok. Another 14 states are pursuing separate cases against Meta in their own courts, and a trial in Tennessee is in its final stages in Nashville. The company has presented the settlement as a template for the rest of the industry, calling on competitors to adopt the same rules.