Meta Platforms Inc. and state attorneys general have discussed a possible mid-trial settlement of a blockbuster case accusing the company of deliberately designing Facebook and Instagram to addict teens, people familiar with the matter said.
The trial, now in its second week in federal court in Oakland, California, poses an enormous risk for Meta as the top legal officers of 29 states are seeking both massive financial penalties on behalf of the public and mandatory changes to how the platforms operate. The people familiar with settlement talks asked not to be identified due to their sensitivity.
A spokesperson for Meta had no immediate comment. A representative of the attorney general’s office in California declined to comment. Representatives of the other three states leading the case, Colorado, Kentucky and New Jersey, didn’t immediately respond to requests for comment.
Meta shares gained as much as 1.7% in premarket trading Wednesday as of 8:20 a.m. in New York. The stock has fallen nearly 14% so far this year, on pace for its first annual decline since 2022.
The states have alleged violations of state consumer protection and federal privacy laws — which carry fines that add up quickly when multiplied by millions of young Instagram and Facebook users.
Meta has denied the states’ allegations and accused the attorneys general of seeking unreasonable design changes and an “outlandish payout.”
By Meta’s own calculations, a loss at trial could saddle it with penalties of as much as $1.4 trillion, an amount close to its market capitalization and unheard of in the annals of legal history. A settlement would likely amount to a far smaller sum.
During the first week of testimony at the trial, jurors heard from Instagram head Adam Mosseri and a collection of current and former Meta employees who helped design its social media platforms and study how teen users interact with tools designed to cut down on problematic use.
Lawyers have said they also expect to call Meta founder and chief executive officer Mark Zuckerberg to testify.
The four attorneys general spearheading the case alleged under their separate state laws that Meta knowingly designed features that encouraged compulsive and prolonged use of its platforms by young people, while simultaneously misleading consumers about safety features.
The broader bipartisan group of 29 states accused the company of collecting data from users under 13 years old in violation of the federal Children’s Online Privacy Protection Act.
Social media companies are facing a global backlash over concerns that they profit at the expense of young users, for whom a growing body of research shows that excessive screen time is dangerously unhealthy.
While authorities from Australia to Europe have enacted or proposed outright bans for youths in the last year, legislative crackdowns in the US have had limited success, turning the courts into a pivotal battleground.
Meta, Alphabet Inc.’s Google, Snap Inc. and TikTok all face billions of dollars in potential exposure from more than 3,000 personal injury claims by individuals and families in the US, and about 1,300 more lawsuits by public school districts across the nation.
The case is People of the State of California v. Meta Platforms Inc., 23-cv-05448, US District Court, Northern District of California (Oakland).
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