Meta Settled a Massive Trial About Social Media Addiction. Its Stock Is Climbing.

Meta and attorneys general from several states settled a massive trial centering on social media addiction.

Concretely, the company was accused of misrepresenting the impact of its platforms on the mental health of children.

CNBC noted that the settlement requires the company make several changes to its apps, including daily usage limits and "nighttime blocks" for teenagers, as well as "enhanced age assurance measures" that would prevent children from using them. Parents and guardians would have additional tools as well.

The company also agreed to pay $12.6 billion, 7% of which has already been paid. The company's stock climbed up to 5% in premarket trading after the news broke before pairing some gains.

According to the lawsuit, Meta "developed and refined a set of psychologically manipulative platform features designed to maximize young users' time spent on its social media platforms."

The states pointed to features including infinite scroll, autoplay, and likes as examples of mechanisms they say encourage prolonged and compulsive use. The attorneys general also allege Meta knew its platforms could contribute to anxiety, depression and suicide among some young users but presented its products as safe.

The trial was on its second week and was expected to go on for several more. A former company executive said during the trial that company CEO Mark Zuckerberg fostered a culture that prioritized growth and engagement over child safety.

"You just cannot trust Mark Zuckerberg with kids," Arturo Bejar said during his testimony. He worked at the company between 2009 and 2015 and was an independent contractor between 2019 and 2021 examining the well-being of teenagers on Instagram. In 2023 he had already told Congress that the company was aware of harms to teenagers and failed to address them.

Another major component of the case involved the Children's Online Privacy Protection Act, or COPPA. The states accuse Meta of knowingly allowing children under 13 to use its platforms and collecting their personal information without obtaining the parental consent required by federal law. Meta strongly denies the allegations and is also challenging the potential financial penalties sought in the case.

The company had said the states' approach could expose it to damages of as much as $1.4 trillion, an amount approaching Meta's roughly $1.5 trillion market capitalization. "The State AGs may call this a landmark case, but their limited claims are unsubstantiated, and their financial demands are vastly disproportionate," a Meta spokesperson said.