Meta has agreed to a settlement with a coalition of state attorneys general in a major federal lawsuit. The case accused the social media behemoth of deliberately downplaying the actual harm its platforms, including Facebook and Instagram, inflict on children's mental health.
Initiated by a coalition of 29 states, the lawsuit was led by California Attorney General Rob Bonta, with the top legal officers from Colorado, New Jersey, and Kentucky playing primary roles. Under the terms of the settlement, Meta has consented to pay a total of $16.7 billion. California Attorney General Rob Bonta announced that, should the court give formal approval to the proposed agreement, the state of California stands to receive between $1.5 billion and $2.1 billion.
Court documents made public on Wednesday unveiled the proposed consent judgment, which outlines a series of mandatory reforms Meta must implement across its applications. These include setting daily usage time limits for teen users on Facebook and Instagram, enabling a "night-time blocking" feature, strengthening age verification processes to prevent younger children from accessing the platforms, and introducing new oversight tools for parents and guardians. As part of the settlement conditions, Meta has agreed to the $16.7 billion payout. Bonta indicated that California's share could be $1.5 billion to $2.1 billion if the court sanctions the agreement.
Bonta stated in a release: "Today's settlement with Meta will reduce the dangers social media poses to our nation's youth and will bring about significant change for children and families. Meta has committed to extensive product modifications that will lower the risk of harm on its platforms within just a few months." Following the news, Meta's share price climbed 5% in pre-market trading. The legal documents specify that once the court issues a "final judgment," all parties involved will waive their rights to appeal.
The settlement was reached as the federal trial was entering its second week in an Oakland federal court. The case, spearheaded by the attorneys general of California, Colorado, New Jersey, and Kentucky, represents a coalition of 29 state attorneys general and originally dates back to 2023. Bonta's settlement announcement noted that the actual agreement involves a bipartisan alliance of 51 attorneys general.
In its own statement, Meta confirmed that the total payout framework for the settlement is approximately $18 billion, to be disbursed in annual installments over a 10-year period. These funds are to be allocated by the states for various youth online safety initiatives. Meta explained that participating states would receive $12.7 billion of the total, representing 70% of the payout. The remaining $5.3 billion, or 30% of the total, is contingent on whether competitors like Google's YouTube and TikTok complete specific product modifications, including daily time limits for teens, age verification, and night-time modes. These two rivals of Meta would also need to contribute the funds corresponding to that remaining 30%, with YouTube shouldering half and TikTok covering the other half.
Meta stated that it expects to record a charge of approximately $10 billion related to litigation costs in the third quarter of 2026, an expense that was not previously included in its financial forecasts. Instagram head Adam Mosseri testified in court on Tuesday, denying that he instructed subordinates to conceal information regarding child safety and product details in order to avoid litigation risks or mislead the public. This federal trial, taking place in California—where Meta is headquartered—and involving multiple states nationwide, carries exceptionally high stakes for the social media giant led by Mark Zuckerberg.