Meta reaches $16.68B settlement with US states over social media harms to children

Meta Platforms agreed on August 26 to pay a maximum of $16.68 billion and make major changes to Facebook and Instagram to resolve claims by US states that the company designed those platforms to addict children, misled consumers about their safety and improperly collected children's personal data.

What the deal ends

The settlement averts a federal trial in California that began on August 18 before US District Judge Yvonne Gonzalez Rogers, who approved the main agreement late on Wednesday. It resolves claims from 29 states, including consumer-protection allegations by California, Colorado, Kentucky and New Jersey, which had been seeking penalties that Reuters reported could reach close to $200 billion. Meta had said the four states' demands amounted to more than $1.4 trillion.

Terms and money

Maximum payments come to about $16.7 billion for 47 states plus Washington, DC, Puerto Rico, American Samoa and the Northern Mariana Islands. Roughly $12.7 billion is guaranteed, while another $5 billion depends on whether Snapchat, TikTok and YouTube accept similar protections for minors. A separate $459 million covers state privacy claims tied to the Cambridge Analytica scandal, and Texas struck its own deal worth more than $1 billion, bringing the total close to $18 billion.

New rules for teenagers

Over the next decade Meta will limit under-18 users of Facebook and Instagram to two hours a day, a limit they can turn off only with parental consent. It will block usage between midnight and 6 a.m. and mute most push notifications during school hours, from 8 a.m. to 3 p.m. The company also committed to measures that keep minors away from age-restricted content. The settlement does not require Meta to abandon personalized recommendations or targeted advertising.

Why it matters

Meta denied wrongdoing in settling. The payout equals roughly three to four months of the company's profit and about one month of revenue; the stock closed 1.1% higher. Colorado Attorney General Phil Weiser said the focus was protecting children and that the relief goes well beyond what a court would likely order. James Speta, a Northwestern University law professor, called the agreement a big deal and noted the restrictions are designed to reduce engagement.