Meta Platforms has been ordered to pay $942 million in a case related to claims that social media use has harmed children. Although this amount is manageable for the company, the growing number of legal challenges should make investors take notice.
On Thursday, a New Mexico judge ruled that Meta must set up a new $567 million abatement fund, on top of the $375 million in civil penalties already ordered by a jury.
Even though the total penalty is not likely to have a big impact on a company worth over $1.5 trillion, shareholders should still pay attention. The judge said Meta’s platforms created a public nuisance by harming children’s mental health and exposing minors to sexual exploitation. This ruling shows a shift in legal strategy, focusing more on how platforms market their products instead of just the content. The judge compared the harm to factory pollution, saying the negative effects on children go beyond the platforms, much like air pollution affects everyone.
Meta said it disagrees with the ruling and plans to appeal. The company says it is confident in its record on teen safety and will keep defending itself against claims it believes are not accurate.
The New Mexico decision comes after a high-profile case in March, when a Los Angeles jury found that Meta’s product design contributed to a young woman’s mental health struggles during her childhood and teenage years.
Barron’s has pointed out that there is rising concern Meta and other companies in the industry could face a wave of settlements similar to the tobacco lawsuits. Meta is still dealing with thousands of combined lawsuits from teenagers, school districts, and state attorneys general. In one case going to trial this month, four states—California, Colorado, New Jersey, and Kentucky—are expected to seek up to $1.4 trillion in damages, based on Meta’s own estimate.
Meta’s stock price went up slightly on Friday, which suggests investors are not worried yet. Still, the increasing legal risks are worth watching closely.
