Meta faces $1.4 trillion trial as 29 states press youth claims

Meta heads to federal court Tuesday to defend against a 29-state lawsuit alleging its apps were engineered to addict young users, a case that could expose the company to as much as $1.4 trillion in damages and force changes to how Facebook and Instagram operate for minors.

"Meta designed a dangerous product for young users, knew it to be dangerous, and then lied to children, families, and the community about how dangerous it was," Rob Bonta, California attorney general, said in a statement Monday.

The trial in Oakland, California, stems from a lawsuit filed in October 2023 in the Northern District of California by a bipartisan coalition of 29 state attorneys general. Four states — California, Colorado, New Jersey and Kentucky — are arguing the case. The complaint alleges Meta "harnessed powerful and unprecedented technologies to entice, engage, and ultimately ensnare youth and teens," citing features such as infinite scrolling and push notifications, and claims the company violated a federal online privacy law by collecting personal data of its youngest users without parental permission.

Beyond financial penalties, the states seek court-ordered changes to Meta's apps for users under 18, including removal of infinite scrolling, video auto-play and "like" counts. Opening arguments begin Aug 18, with the trial expected to last seven weeks. Meta CEO Mark Zuckerberg and Instagram head Adam Mosseri could be called to testify.

Meta disputes the allegations, calling them "unsubstantiated" and the financial demands "vastly disproportionate." A spokesperson said the states "offer no proof anyone in their states was misled" and are "attempting to penalize Meta for industry-wide challenges like age verification."

The trial comes less than a week after a New Mexico judge ordered Meta to pay $567 million and make changes to its apps, finding they contributed to a youth mental health crisis. Meta has said it will appeal that ruling.

Precedent Builds Against Platforms

The Oakland case follows a landmark verdict in Los Angeles in which jurors deliberated more than 40 hours across nine days before finding both Meta and Google-owned YouTube negligent in the design and operation of their platforms. The jury concluded each company's negligence was a substantial factor in harming the plaintiff, a 20-year-old woman identified in court documents as KGM. Jurors also determined the companies acted with malice, setting up a punitive damages phase that could substantially raise the award. TikTok and Snap reached settlements before that trial began.

The outcome carries implications beyond Meta. A ruling against the company could set precedent for other social media platforms facing similar youth harm claims, including Google's YouTube, and reshape how apps design engagement features for minors. If the states prevail, Meta faces both a multibillion-dollar penalty and mandatory product changes that could reduce time spent on its platforms and dent advertising revenue. If Meta wins, it would blunt momentum for a wave of state and federal efforts to regulate youth social media use.

This article is for informational purposes only and does not constitute investment advice.