Meta agreed to pay as much as $18 billion over a decade to settle youth-addiction lawsuits from nearly all U.S. states, while leaving its personalized-feed and ad-targeting business untouched. Shares rose about 1% as investors welcomed a deal that costs far less than the $1.4 trillion in penalties the states were said to be seeking before trial.
Meta Platforms agreed on Wednesday to pay as much as $18 billion over a decade and limit how teenagers use Facebook and Instagram, resolving claims from nearly every U.S. state that it designed the platforms to addict children. Meta denied wrongdoing. Yet the agreement leaves the personalized feeds and ad targeting that underpin its profits fully intact.
What the deal requires
The core payment falls between $16.68 billion and $17.1 billion, covering 47 states, Washington D.C., and U.S. territories. Texas negotiated its own separate agreement worth approximately $1 billion, bringing the combined total to around $18 billion once contingencies are included. Meta must also default teen accounts into a two-hour daily usage cap and a midnight-to-6-a.m. blackout window, alongside enhanced parental controls and age verification.
Investors read it as a clean exit
The settlement removes a regulatory hurdle that had weighed on Meta's stock and lets the company avoid a lengthy trial that could have exposed more internal documents on its treatment of young users, according to more than a dozen analysts and legal experts. Meta's shares rose about 1% on the news, a sign investors welcomed an outcome that will cost far less than the $1.4 trillion in penalties the states were said to be seeking before trial.
Roughly a month before the deal, Instagram head Adam Mosseri met attorneys general representatives and said Meta would appeal any adverse verdict, as it is already doing following a billion-dollar child-safety ruling won by New Mexico, people familiar with the matter said. Mosseri added that Meta was ready to make constructive changes to the platform if it could reach an agreement.
Rivals feel the pressure
About 30% of the payout, along with the stricter teen-usage limits, becomes due only if rival platforms accept comparable obligations in settlements of their own. An additional $5.3 billion is tied to commitments from YouTube and TikTok. Alphabet's shares closed down 1.4%, and Snap ended 8.4% lower.
The legal fight isn't over
New Mexico and Florida were not part of the settlement, and the European Commission has threatened to fine Meta after preliminarily finding it in breach of a 2022 content-moderation law. As Cornell law professor James Grimmelmann put it: "The bellwether trial is over, but Meta's trials are just beginning."
Sources: Investing.com, Crypto Briefing
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