Meta is facing an unprecedented legal battle as the company defends itself against a coalition of 29 state attorneys general in the U.S. The state AGs allege that the company intentionally designed addictive systems, despite knowing that those systems pose risks to users.
As reported by CNBC, Meta could be looking at the most significant penalties in its history if it loses this new trial. The lawsuit hinges on whether the company failed in its responsibilities to protect users from harm.
The court trial, which begins August 18 in California, stems from a federal complaint filed by a coalition of attorneys general in 2023. In that, the AGs alleged that Meta “designed and deployed harmful features on Instagram and Facebook that addict children and teens to their mental and physical detriment.”
That federal case was largely based on the “Facebook Files” expose, published in The Wall Street Journal in 2021. That report focused on leaked internal documents shared by Meta whistleblower Frances Haugen, which showed that Meta’s own internal research had repeatedly found that Facebook and Instagram were both harmful for various categories of susceptible people. The report alleged that Meta ignored this in order to prioritize company profits.
More recently, Meta also lost a high-profile case in California, in which a user of Facebook and Instagram accused Meta of creating systems that caused her harm. In that case, both Meta and Google-owned YouTube were found to have ignored known risks in order to maximize business opportunities.
That verdict established legal precedent for social media addiction, which now leaves Meta open to litigation from thousands, maybe millions, more people who could claim to have been harmed.
Meta sought to have the case dismissed in order to contain its impacts, but the company’s legal efforts failed, leading to this latest trial, which will see California Attorney General Rob Bonta co-leading the case against Meta, which could end up costing the company potentially more than $1 trillion in future liabilities.
The final impacts here are hard to predict, but they could range from Meta being forced to enact new in-app warnings about the dangers of social media addiction, to algorithm opt-outs, as Meta has been forced to offer in Europe.
In the EU, Meta now offers users an algorithm opt-out, which enables users to view content in chronological order. The company also offers an ad-free subscription package in the EU, which allows users to opt out of having their data used for advertising if they choose.
It’s not hyperbole to suggest that this could be an existential crisis for the company. Reuters recently reported that the combined costs of potential payouts over social media harm lawsuits could exceed $1.4 trillion overall.
Meta’s current market cap is around $1.5 trillion, giving some scope to the potential liabilities.
At the same time, Meta continues to challenge the legal standing of such claims, and has argued that social media addiction is not a psychological condition verified by the Diagnostic and Statistical Manual of Mental Disorders.
Given the stakes, Meta will be pulling out all the stops in its defense.
