According to California Attorney General Rob Bonta, the state could receive between $1.5 billion and $2.1 billion from the agreement if it receives court approval.
- The settlement is substantially lower than the $1.4 trillion in damages Meta said the four states could seek in a July court filing.
- Under the proposed agreement, Meta has to strengthen age verification, parental controls and systems for removing users under 13.
- An independent auditor will oversee the company’s compliance with the settlement for the duration of the agreement.
Meta Platforms (META) shares were muted in morning trade Wednesday after the company agreed to a proposed multistate settlement worth up to $17 billion to resolve allegations that Facebook and Instagram were designed to encourage compulsive use among children and teens and that Meta misled users and the public about the platforms’ safety.
The settlement announced by California Attorney General Rob Bonta and a bipartisan coalition of attorneys general is substantially lower than the $1.4 trillion in damages Meta said the four states could seek in a July court filing. Meta stated that the payment will be distributed in annual installments over a 10-year period.
The settlement also includes changes to how people under 18 can access and use Meta’s platforms, with some restrictions becoming stricter if other social media platforms, like YouTube and TikTok, adopt similar measures.
Meta stated that participating states will receive approximately 70% of the allocated payment over the decade, and the remaining 30% will be released only after YouTube and Tiktok implement the same age assurance measures and pay amount match the 30% figure, which comes to around $5.3 billion.
Our new Time Limit commitments, Night Mode features and usage limits during school hours set the right path forward for our whole industry, but this framework will only work if all our peers join us.
– C.J. Mohoney, Chief Legal Officer, Meta Platforms
META stock edged 0.5% higher in morning trade and was among the top trending tickers on Stocktwits at the time of writing. Retail sentiment around the Mark Zuckerberg-led enterprise improved to ‘neutral’ from ‘bearish’ territory over the past day.
Meta Settlement Puts New Limits On Teen Social Media Use
The settlement comes just days after trial began in federal court in Oakland. The agreement still requires court approval before it takes effect.
Under the proposed agreement, users under 18 would receive a default daily limit of two hours on Meta’s platforms. That limit could only be lifted by a parent. If other social media companies agree to similar restrictions, the default limit would fall to one hour.
Meta also has to introduce a default overnight block from midnight to 6 a.m. for users under 18, with parents able to override the restriction. That window could expand to 10 p.m. to 7 a.m. if other platforms adopt similar terms.
The settlement would also block notifications during overnight hours and the school day, limit the display of likes and reactions to minors, and prohibit cosmetic procedure filters for users under 18.
Teen users would also have the option of a non-personalized feed that does not use an algorithm designed to keep them scrolling.
Meta Faces New Age Verification And Oversight Rules
The agreement would require Meta to strengthen its systems to identify users under 18 and remove children under 13 from its platforms.
The company is also required to expand parental supervision tools and create a faster process for teens to report potentially harmful content. Meta would be required to respond to 90% of those reports within six hours.
An independent auditor will be assigned to oversee Meta’s compliance, with access to company information and the ability to report concerns directly to the attorneys general.
Meta Avoids High-Stakes Trial Fight
The settlement follows two recent losses for Meta in a separate case brought by New Mexico. In March, a jury ordered Meta to pay $375 million after finding it had misled consumers about platform safety. Earlier this month, a judge found Meta had created a public nuisance and ordered an additional $567 million in penalties along with youth-safety measures. Meta has said it will appeal both rulings.
The case that was just settled centered on allegations that Meta violated state consumer protection laws and the federal Children’s Online Privacy Protection Act (COPPA). California, Colorado, Kentucky and New Jersey brought state-law claims, while the broader group of 29 states alleged that Meta collected data from children without parental notification or consent and used that information to develop machine-learning and generative AI models.
The settlement removes one major legal threat, but it does not end Meta’s broader legal exposure, like the trial in Tennessee and ongoing litigation involving individual plaintiffs and school districts.
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