LAST UPDATE | 26 Aug

META HAS REACHED a $17 billion (€14.58 billion) settlement with some 47 US states that will include “fundamental changes to Instagram and Facebook”, according to the California Department of Justice.

The states claimed that Meta, which owns Facebook, Instagram and WhatsApp, violated both state-level and federal laws, though the exact allegations vary by state.

California, Colorado, New Jersey and Kentucky led the prosecution of Meta from a courtroom in Oakland, just a short drive from San Francisco.

In a statement, California Attorney General Rob Bonta announced a “proposed settlement, which remains subject to court approval through entry of a consent judgment”.

The case revolved around allegations that Meta “designed and deployed harmful features on Instagram and Facebook that drive compulsive use by children and teens to their mental and physical detriment”.

It was also alleged that Meta “mislead users, their families and the public regarding the existence and severity of these risks”.

Trial began on 18 August and the California Department of Justice said that the settlement “provides for strong injunctive terms designed to help protect children from the mental health harms associated with social media”.

This includes default daily time limits on social media and a block on overnight use that can only be lifted by a parent, enhanced parental supervision tools, robust age assurance measures to detect users under 18 and children under 13 that are on the platform, and the appointment of an independent auditor to oversee compliance.

The proposed settlement also includes a payment of up to $17 billion (€14.58 billion) to the states over 10-years – California alone will receive $1.5 billion (€1.29 billion) to $2.1 billion (€1.8 billion) if this settlement is approved by the court. 

However, the $17 billion settlement is a fraction of the company’s 2025 revenue of $201 billion (€172.35 billion).

Attorney General Bonta remarked that the settlement will “make social media less dangerous for our kids and make a world of a difference for children and their families”.

He added that Meta has “agreed to make massive transformations that will reduce the risk of harm from its platforms — and will do it within months”.

“We are talking about time limits, stopping notifications during school, a block on the app during critical overnight hours, bans on plastic surgery filters, and so much more,” said Bonta.

He said this will result in “real change, real transparency, and real enforceable protections for children on Facebook and Instagram — right now, no more waiting”.

Other changes will include a ban on displaying numbers of likes or reactions to users under 18 and an enhanced mechanism for teens to report potentially harmful content and a requirement that Meta respond to 90% of those reports within six hours.

In California, the proposed settlement is earmarked for the prevention or remediation of mental health or other harms associated with social media use.

The lawsuit was filed in 2023 and alleged Meta illegally collected and used the data of children under the age of 13 who used its platforms.

It also alleged that Meta made decisions in designing its platforms that drove excessive use and put young users at risk, and that it lied about the safety of Facebook and Instagram.

‘Calling on TikTok and YouTube to join us’

In a statement, Meta called on “TikTok and YouTube to join us”.

“These protections will only be truly effective if we work with our peers — TikTok and YouTube — to put the same measures in place,” said a spokesperson. 

It added that around 30% of the financial settlement will not be paid unless YouTube and TikTok implement a one-hour daily limit, night mode, and age assurance measures.

Meta said another condition for this 30% of the settlement, equal to around $5 billion (€4.29 billion), is that YouTube and TikTok each pay an amount matching this figure.

Meta added that it expects to accrue a legal expense of around $10 billion (€8.57 billion) in Q3 of this year in relation to the settlement.

“This charge was not contemplated in the expense range that was provided in the Q2 earnings call,” said a spokesperson.

“Otherwise, the guidance ranges provided in our July earnings release remain unchanged.”

Meanwhile, Meta said that the majority of changes it will make to Facebook and Instagram will remain in place for 10 years, but the time limit and night mode features will start with a five-year commitment.

A spokesperson said that if its rivals sign on to the agreement, it will extend this commitment to 10 years.
C.J. Mahoney, chief legal officer at Meta, said that the “framework we’ve negotiated will empower parents to easily manage how their children access our platforms”.

However, he added that “this framework will only work if all our peers join us”.

“We therefore call on our industry peers, TikTok and YouTube, to implement this new framework, right away,” said Mahoney.

He added: “As a parent, I’m proud of both the work Meta has done to protect kids historically, and of this new groundbreaking agreement.

“But its success depends on all other social media platforms following Meta’s lead.”