Meta faces major US setback, agrees to $16.68 billion settlement with 29 states; FB, Instagram to get new safeguards
Meta has agreed to a settlement of up to $16.68 billion with 29 US states over allegations that its social media platforms harmed children. The company was accused of deliberately making Facebook and Instagram addictive for children and misleading users about safety.
Meta was also accused of collecting children’s personal data without parental consent and using it to train AI and machine learning models.
Changes for teen users
Under the settlement, Meta will make several changes for teenage users of Facebook and Instagram in the US. These will include daily usage limits and restrictions on accessing the platforms during nighttime hours.
The company, however, has not admitted to any wrongdoing or liability as part of the agreement.
The settlement was reached during a federal trial in California involving claims filed by 29 US states. The case was closely watched because it focused on concerns over the impact of social media platforms on children and teenagers.
Following reports of the settlement, Meta shares gained 4.4 per cent in pre-market trading.
What is the case?
The case included claims that Meta had violated consumer protection laws in states including California, Colorado, Kentucky and New Jersey. The states also accused the company of violating the federal Children’s Online Privacy Protection Act.
According to the allegations, Meta collected personal information from users it knew were children without properly informing or taking consent from their parents.
The states further alleged that data collected from children was used by Meta to train machine-learning systems and generative artificial intelligence models.
Meta rejects allegations
Meta has repeatedly rejected these allegations. The company has maintained that it has introduced several measures over the years to make its platforms safer for younger users.
It had also argued that it could not be accused of misleading consumers by describing Facebook and Instagram as addictive, as “social media addiction” is not formally recognised as a psychiatric condition.
Before the trial began, Meta said the four states involved in the case were seeking penalties of as much as $1.4 trillion. The states, however, had suggested that the amount could be closer to $200 billion.
Apart from financial penalties, the states had also sought damages and major changes to the way Meta operates its platforms. These demands could have included restrictions on children being allowed to create accounts.
The settlement comes at a time when social media companies are facing increasing legal scrutiny over the effect of their platforms on young users.
Meta, Snap, Google-parent Alphabet’s YouTube and TikTok-parent ByteDance continue to face thousands of lawsuits. The cases broadly allege that these platforms were designed with features that encourage children and teenagers to spend excessive amounts of time online.
