Meta Platforms (NASDAQ: META) has been ordered to pay $942 million after a New Mexico judge ruled that the company failed to adequately protect children on Facebook and Instagram, marking one of the largest legal penalties ever imposed against a social media company over youth safety.
The decision dramatically raises the stakes for Meta as it faces thousands of similar lawsuits across the United States, with some plaintiffs seeking damages that could total more than $1 trillion.
Judge Orders Massive Penalty and New Child Safety Fund
A New Mexico judge ruled Thursday that Meta must pay a total of $942 million, consisting of:
- $375 million in previously awarded civil penalties
- $567 million to establish a new fund intended to address harms allegedly caused by the company’s social media platforms
The new fund will finance programs designed to help address the long-term effects of social media use on young people in New Mexico.
State attorneys had originally sought nearly $780 million for the remediation fund, making the judge’s final award slightly smaller than requested.
Meta Must Change How Facebook and Instagram Work for Kids
The ruling goes beyond financial penalties.
The court also ordered Meta to implement several new safety measures for underage users in New Mexico, including:
- Limiting how much time minors can spend on Facebook and Instagram.
- Hiding public “like” counts by default for younger users.
- Providing clearer disclosures about the potential risks associated with using the platforms.
If upheld on appeal, the decision could become a model for similar restrictions in other states.
Meta Plans to Appeal
Meta said it strongly disagrees with the ruling and intends to challenge it.
A company spokesperson said:
“We remain confident in our record of protecting teens online and will continue to defend ourselves against claims that misrepresent the facts.”
The company argues it has invested heavily in parental controls, age-appropriate experiences, and other safety tools for younger users.
The Lawsuit Focused on Child Safety
The case was brought by New Mexico Attorney General Raúl Torrez, who alleged that Meta allowed minors to encounter sexually explicit material and made it too easy for online predators to contact children through Facebook and Instagram.
Earlier this year, a jury found that Meta had willfully violated New Mexico’s consumer protection laws.
Following Thursday’s ruling, Torrez said the case could become a blueprint for future lawsuits.
“New Mexico led the way in the courtroom. Now other states, and other countries confronting the same crisis, have a roadmap they can follow.”
A Much Bigger Legal Battle Is About to Begin
The New Mexico case is only one piece of Meta’s growing legal challenges.
The company is currently facing thousands of lawsuits from:
- State attorneys general
- School districts
- Families
- Individual plaintiffs
Many accuse Meta of prioritizing user growth and engagement over the safety and mental health of young users.
Another major trial involving four state attorneys general is scheduled to begin jury selection next week in Oakland, California. According to court filings, those states are seeking more than $1 trillion in damages.
Earlier this year, a Los Angeles jury also found both Meta and YouTube liable in a lawsuit brought by a young woman who claimed excessive social media use contributed to serious mental health problems.
Meta disclosed that legal proceedings alone cost the company $2.4 billion during the second quarter, highlighting the mounting financial impact of ongoing litigation.
The Bigger Risk for Meta
Although Meta generates hundreds of billions of dollars in market value and substantial cash flow, the New Mexico ruling signals that legal risks surrounding youth safety are becoming increasingly expensive.
More importantly, the court-ordered product changes could influence future regulations and lawsuits across the U.S. If additional states pursue similar remedies, Meta may face not only larger financial penalties but also broader changes to how Facebook and Instagram operate for younger users.
For investors, the outcome of upcoming cases could prove just as significant as Meta’s advertising growth and AI investments, as legal liabilities increasingly become an important factor in evaluating the company’s long-term outlook.
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