Meta hit with $16.68 bn child safety claim

Meta Platforms has agreed to pay up to $16.68 billion to settle claims brought by US states alleging that Facebook and Instagram were designed to be addictive for children, misled users about platform safety and improperly collected personal data from minors, according to court filings.

The settlement was reached during a federal trial in California involving claims brought by 29 states, bringing an end to one of the most closely watched legal challenges over the impact of social media on children and teenagers.

As part of the agreement, Meta will also introduce changes for teenage users of Facebook and Instagram across the US, including daily usage limits and restrictions on access during nighttime hours. The company, however, denied wrongdoing and liability as part of the settlement.

Meta shares rose 4.4 per cent in pre-market trading following news of the agreement.

The case included allegations that Meta violated consumer protection laws in California, Colorado, Kentucky and New Jersey. The states also alleged that Meta violated the federal Children's Online Privacy Protection Act by collecting personal information from users it knew were children without obtaining parental notification or consent.

The states further alleged that the company used children's data to train machine-learning and generative artificial intelligence models.

Meta has consistently denied the allegations and said it has taken extensive measures to protect young users on its platforms. The company had also argued that it could not have misled consumers by describing its services as addictive because "social media addiction" is not formally recognised as a psychiatric condition.

Before the trial, Meta said the four states were seeking as much as $1.4 trillion in penalties, although the states had indicated that the figure could be closer to $200 billion. They were also seeking additional damages and court orders requiring significant changes to Meta's platforms, including potentially preventing children from creating accounts.

The settlement comes amid a broader legal battle over the impact of social media on youth mental health. Meta, Snap, YouTube parent Alphabet and TikTok parent ByteDance continue to face thousands of lawsuits alleging that their platforms were deliberately designed with features that encourage excessive use among children and teenagers.