Meta to pay up to $16.7bn to settle children’s social media harm case

Meta has agreed to pay up to $16.68bn to settle its blockbuster legal battle with more than two dozen US states over alleged failures of child protection and social media addiction, just as the case was getting under way in a California courtroom.

The parent of Facebook and Instagram has agreed to pay the settlement to 29 states, according to filings on Wednesday. Meta has previously estimated that losing the case could have cost it hundreds of billions of dollars.

Social media companies are facing a wave of similar cases, all of which contend that Big Tech platforms cause personal injury by developing deliberately addictive products.

As part of the settlement, Meta has agreed to impose default daily limits and night-time blocks for teenage users of its social media apps, bolster its age-assurance systems to prevent children from accessing inappropriate content, and provide extra tools for parents and guardians.

The agreement does not include an admission of wrongdoing by Meta. The settlement requires court approval.

“The framework we’ve negotiated will empower parents to easily manage how their children access our platforms,” said CJ Mahoney, Meta’s chief legal officer.

Meta said that about $5.3bn of the settlement would only be paid out if YouTube and TikTok each agreed to pay the same sum, as well as implementing some of the same usage limits and age-assurance measures.

“Because teens move fluidly across dozens of apps, we need an industry-wide solution,” Mahoney said.

The company said that its settlement payments would be distributed annually over 10 years and that it would incur $10bn in legal expenses related to the agreement.

Meta earned $60bn in net income last year and revenues of $201bn.

The social media company’s shares opened 1 per cent lower on Wednesday.

The case was spearheaded by four state attorneys-general, in California, Colorado, Kentucky and New Jersey, who alleged that Meta knowingly built its apps to be addictive to young users.

Another group of 29 states accused Meta of collecting data on under-13s in breach of the US Children’s Online Privacy Protection Act.

The case, held before US District Judge Yvonne Gonzalez Rogers in Oakland, was expected to call on several Meta executives, including chief executive and co-founder Mark Zuckerberg. On Tuesday, Instagram chief Adam Mosseri testified in court.

The settlement comes as social media companies are facing a wave of public anger over how their apps can expose youngsters to adult content or keep them glued to their smartphone screens, affecting their mental health.

Governments in Australia, Europe and the UK, as well as some US states, are planning or bringing in new age restrictions that would ban younger teens from accessing apps such as Instagram, Snapchat, YouTube and TikTok.

Wednesday’s settlement comes after March’s courtroom defeat in a different case brought by an individual plaintiff, in which Meta and Google were held liable for designing apps intended to be addictive to children.