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Meta Platforms has agreed to pay $16.68 billion (roughly Rs. 1.40 lakh crore) to settle lawsuits over allegations that it addicted children to its social media platforms, misled them on their safety, and collected data without consent.
This agreement was reached during the hearing of the lawsuit filed by 29 states in the Federal Court of California. Under this, now Meta will have to compulsorily implement features like daily limit and nighttime block on Facebook and Instagram for teenagers across the country.
Key points of the agreement
- Meta agreed to pay $16.68 billion (the maximum amount).
- The settlement was reached during an ongoing lawsuit with 29 US states.
- Daily limits and nighttime blocks will be imposed for teenagers on Facebook and Instagram.
- Meta has denied any wrongdoing.
- Meta shares were up 4.4% in pre-market trading.
What were the allegations and lawsuit of the states?
The case is part of a larger series of lawsuits filed against social media companies by several US states, local governments, school districts and individual citizens. It was alleged that these platforms have increased the mental health crisis of the youth.
The case, pending in federal court, involved claims in California, Colorado, Kentucky and New Jersey alleging that Meta violated state consumer protection laws. Additionally, 29 states alleged that Meta violated the Children’s Online Privacy Protection Act (COPPA).
The company collected children’s personal data without notifying parents or obtaining their consent and used it to train its machine learning and generative AI models.
Meta stance and old logic
Meta rejected all the allegations and said that it has worked hard to protect children on its platform. The company argued that it cannot mislead consumers that its services are addictive, as ‘social media addiction’ is not a recognized mental or psychiatric condition.
In a court filing before the trial, Meta had said that California, Colorado, Kentucky and New Jersey were demanding a fine of up to $1.4 trillion (about Rs 117 lakh crore).
However, states had suggested the amount would be closer to $200 billion. Apart from this, there was also a demand for additional compensation and a complete ban on creating new accounts for children.
Lawsuits are also going on against other big tech companies
Meta, Snapchat (and its parent company Snap), YouTube (and its parent company Alphabet) and TikTok (and its parent company ByteDance) are still facing thousands of lawsuits in various courts. These companies are accused of knowingly adding features to their apps that make children and teenagers addicted.
Auckland Federal Court: Dozens of cases are going on simultaneously in Oakland before Judge Ivonne Gonzalez Rogers, involving lawsuits by individuals, school districts and state governments.
Los Angeles and other states: A Los Angeles judge is hearing thousands of individual petitions. About 30 states have filed cases in state courts. The hearing against Meta has been going on in Nashville since July.
Meta’s defeat in New Mexico and other cases This $16.68 billion settlement comes as Meta recently lost both phases of a landmark lawsuit filed by the state of New Mexico:
March decision: A New Mexico jury fined Meta $375 million (about Rs 3,150 crore) after finding it guilty of misleading consumers in the name of safety.
Decision of 6 August: The judge held that Meta had created a ‘public nuisance’ and ordered it to pay an additional $567 million (about Rs 4,760 crore) and enforce youth-safety rules.
Apart from this, the first decision on an individual’s petition in March itself was against Meta and Google. A Los Angeles jury found plaintiff ‘Callie G.M.’ held these companies responsible for depression and anxiety and ordered them to pay a combined $6 million in damages. Meta and Google have said that they will appeal against these decisions.
Settlement of four companies in the school district case
In the first case scheduled for hearing in the Federal Court, all four companies – Meta, Snap, Alphabet and ByteDance had reached a settlement. In this case filed by Breathitt County School District of Kentucky, it was alleged that these apps are harming the students. Under this, the school district was scheduled to receive a combined $27 million.
What is the Children’s Online Privacy Protection Act (COPPA)?
COPPA is a US federal law designed to protect the personal information of children under the age of 13 online.
Under this, it is mandatory for any app or website to take explicit consent of parents to collect children’s data, create their online profile or train AI models. There is a provision of heavy fine for violating this.
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