Meta Platforms has agreed to pay a reported $16.7bn (roughly €15.5bn) to settle claims brought by 29 US states that Instagram and Facebook were deliberately designed to be addictive to children. The settlement was disclosed in a court filing on 26 August, in the second week of a federal trial in Oakland, California.
According to CNBC, the deal includes $12.6bn in cash, with 7% payable immediately. Meta shares rose about 5% in premarket trading following the news, as investors welcomed an end to a case that some state officials had suggested could carry penalties running into the hundreds of billions of dollars.
What the states alleged
The case, which combined lawsuits first filed in 2023, was led by California Attorney General Rob Bonta alongside attorneys general from Colorado, New Jersey and Kentucky. It accused Meta of breaching state consumer-protection laws and the federal Children’s Online Privacy Protection Act (COPPA) by knowingly collecting personal data from underage users without parental consent, including data later used to train machine-learning and generative AI systems.
“Meta’s business model can be summed up in four simple words: ‘hook’ the users, ‘hold’ them for as long as they can, ‘harvest’ their data, and then ‘hide’ the truth from the public when making public statements.” — Megan O’Neill, California Deputy Attorney General
Before the settlement, states had floated potential damages as high as $1.4 trillion, though more realistic pre-trial estimates put the figure closer to $200bn, according to NPR and EconoTimes. The settlement came a day after Instagram head Adam Mosseri testified that he had not directed employees to withhold child-safety information from him.
Product changes required
Beyond the payment, the proposed consent judgment requires Meta to introduce daily usage limits and nighttime blocks for teenage accounts on Facebook and Instagram, alongside enhanced age-verification measures and additional parental-control tools. Meta has denied the core allegations, arguing it has worked to protect young users and that “social media addiction” is not a recognised psychiatric condition.
The Oakland settlement is not Meta’s only recent legal setback in the United States. In March, a New Mexico jury ordered the company to pay $375m over misleading safety claims, and in August a judge added a further $567m after finding Meta had created a public nuisance. Separately, a Los Angeles jury found Meta and Google liable for $6m in damages to an individual plaintiff in a related case.
For readers outside the United States, the case is likely to be watched closely by European regulators enforcing the EU’s Digital Services Act and Britain’s Online Safety Act, both of which impose separate obligations on platforms to protect children online, though the settlement itself applies only to the US states involved.
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