If four of the states suing Meta for allegedly fueling a teen mental health crisis prevail in their case, the company will be on the hook for a whopping $1.4 trillion in penalties, Meta says — a figure the tech giant blasted as “outlandish.”
The Mark Zuckerberg-led company arrived at the gigantic sum — which is nearly as large as the company’s entire market cap — based on how the attorneys general of California, Colorado, Kentucky and New Jersey have argued penalties should be calculated if they win the case.
The two sides are scheduled to face off in Oakland federal court on Aug. 18.
“A sanction of that size has no analog in the history of consumer protection enforcement,” Meta’s attorneys wrote in the late Monday filing, adding that the states’ proposals were “unsubstantiated” and “outlandish.”
A total of 29 states are attached to the lawsuit against Meta, which accuses the company of major violations of the Children’s Online Privacy Protection Act. The legislation bars the collection of data from underage users without parental consent.
They further allege that Facebook and Instagram were designed to be addictive to kids, causing a wave of issues ranging from anxiety and depression to self-harm and even suicide.
California, Colorado, Kentucky and New Jersey are also targeting Meta for allegedly misleading the public about safety risks.
Meta, which has strenuously denied wrongdoing, said the four states’ proposed remedies go far beyond the scope of the case. They also accuse Meta of improperly double- or even triple-counting teen users who allegedly experienced harm based on how long they use Facebook and Instagram each day.
“These remedies have no basis in the record in this case, are entirely unmoored from the claimed deceptive statements or unfair practices, are based on features this Court has held are immune from liability under Section 230, and violate the legal and due process limits on the scope of [Unfair Practices Act] penalties,” the company’s lawyers wrote, referring to the section of the Communications Act of 1934 that broadly protects online platforms from being held liable for content posted by their users.
While the states’ specific proposals remain under seal, plaintiff attorneys said at a court hearing last month that they were guided by local laws and the estimated number of underage users in each state who were affected.
“Our lawsuit alleges Meta has prioritized profits over the safety of kids and fueled the mental health crisis we see impacting a generation of American children,” a spokesperson for the California attorney general’s office said in a statement. “The California Department of Justice looks forward to holding Meta fully accountable at trial in August.”
Representatives for the attorneys general of Colorado and New Jersey declined comment. Kentucky’s AG did not immediately respond.
Meta shares were up 3% in trading Tuesday.
US District Judge Yvonne Gonzalez Rogers, who is overseeing the case, shot down an attempt by Meta to get it thrown out on June 30, stating in part that there were still material factual disputes as to whether the company’s apps were designed to be addictive.
Meta faces more than 2,400 pending lawsuits brought by school districts, parents and governments in what critics have described as a “Big Tobacco moment” for social media.
The company suffered major legal setbacks earlier this year in back-to-back court losses – one in California state court that found Meta liable for fueling social media addiction for a woman identified as KGM, and another in New Mexico, where a jury found that Meta failed to protect kids from online sex creeps and misled the public about safety risks on its apps.
Still, the $1.4 trillion penalty is likely far higher than what Meta will ultimately face in the case brought by state AGs.
In the KGM case, Meta and fellow defendant Google were ordered to pay a total of $6 million in damages, with Meta on the hook for 70% of that sum.
In New Mexico, Meta was ordered to pay $375 million in penalties. Company spokesman Andy Stone touted the verdict as “just a fraction of what the state sought.”
With Post wires