NEW YORK — Meta, the owner of Facebook and Instagram, said on Wednesday it has agreed to pay about $18 billion as part of a settlement to resolve a multistate lawsuit claiming that it intentionally designed addictive platforms that harmed young people’s mental health.
The deal that came as a surprise ends a landmark legal battle for the social media giant.
“The agreement includes a payment of approximately $18 billion, which can be used to fund youth online safety initiatives, among other state priorities,” Meta said in a statement.
As part of the settlement, Meta has agreed to make changes to its platforms, such as establishing daily time limits for teen users, according to a court filing.
Just over $17 billion will go to settling a lawsuit brought jointly by 29 states in 2023; the remainder will settle claims between Meta and other states and territories.
District Court Judge Yvonne Gonzalez Rogers approved the settlement on Wednesday.
The agreement comes just over a week after a trial began in California, in which four of the states were seeking as much as $1.4 trillion in damages and changes to the company’s platforms.
Instagram head Adam Mosseri was set to take the stand for a second day on Wednesday, and Meta CEO Mark Zuckerberg was also expected to testify in the case.
Meta has long denied that its platforms harm children, arguing it’s invested heavily in safety features, and has called the states’ claims “unsubstantiated.” Meta did not admit wrongdoing as part of the settlement.
California Attorney General Rob Bonta, who led the lawsuit, said in a statement that the plaintiffs had “secured a settlement with Meta that will make social media less dangerous for our kids and make a world of a difference for children and their families.”
“Meta has agreed to make massive transformations that will reduce the risk of harm from its platforms — and will do it within months,” Bonta said.
In a separate statement, Meta’s chief legal officer, C.J. Mahoney, said the “framework we’ve negotiated will empower parents to easily manage how their children access our platforms.”
The company also called on competing social media platforms like TikTok and YouTube to follow suit.
“Because teens move fluidly across dozens of apps, we need an industrywide solution. We therefore call on our industry peers, TikTok and YouTube, to implement this new framework, right away,” said Mahoney.
The states believed a settlement would bring about more change, more quickly, North Carolina Attorney General Jeff Jackson said in a press conference on Wednesday. Jackson called the agreement the largest settlement with a big tech company in history.
“Litigation would mean that we were still many years away from bringing any of these child safety upgrades to these platforms, it would risk losing another generation,” he said.
While $18 billion amounts to only a fraction of the $200 billion Meta earned in revenue last year, the agreement’s changes designed to reduce the time teens spend on its apps could significantly impact its ad-based business model. The company acknowledged in its most recent earnings report that the youth safety-related trials posed a risk of “material loss” for the company.
Meta said it will pay out 70% of the settlement fund to the states in annual installments over the next decade — the remaining 30% will be paid only if YouTube and TikTok agree to make payments to the states and similar changes to their apps.
Meta lost two similar addiction cases earlier this year: one from New Mexico’s attorney general in which Meta was ordered to pay nearly $1 billion in damages and another brought by a teen known as K.G.M. that resulted in joint damages for Meta and YouTube of $6 million.
Meta — along with other social media giants — still faces hundreds of lawsuits brought by individuals, families and school districts accusing it of addicting and harming children. Future losses could bring about additional financial penalties for the company, although Meta denies the claims.
The state attorneys general had accused Meta of intentionally designing features — such as an infinitely scrolling feed, algorithmic recommendations and frequent notifications — to hook kids and teens. They also claimed the company misled the public about the risks to young people from its platforms and illegally collected data from children under 13 without parental consent.
The agreement builds on restrictions and safety tools that Meta had already rolled out by default as part of its Teen Accounts settings — the effectiveness of which had been questioned by the states and some experts.
Meta has agreed to implement a two-hour cumulative, daily time limit across its apps for users aged 13 to 17 that only parents can change. It will prompt teens after every 15 minutes of continuous use of Facebook or Instagram “to encourage intentional use,” the company said.
The company will also implement a default “night mode,” blocking access to the apps from midnight to 6 am for teens, and a “school mode,” designed to reduce the number of notifications teens receive during school hours.
Meta will also hide the number of likes and reactions on teens’ posts by default and block “extreme makeup filters” for minors. And it will give teens the option to turn off autoplay and choose a feed not based on algorithmic recommendations as their default.
Parents and online safety experts have long raised concerns that teens could circumvent Meta’s default protections by lying about their age when they sign up for its apps. As part of the settlement, Meta said it is “investing in even stronger technology” to catch teens who misrepresent their age — but also called on app stores to help with age verification.
Source: Saudi Gazette