Why Meta is facing $1.4T penalty demand in US
What's the story
Meta Platforms has revealed that four US states are seeking a whopping $1.4 trillion in penalties from the company. The staggering figure was disclosed in a court filing yesterday. It stems from allegations that Meta intentionally designed its Facebook and Instagram platforms to be addictive for younger users, while also misleading the public about their safety.
Legal battle
Meta disputes staggering penalty amount
The $1.4 trillion figure, which is nearly equal to Meta's market capitalization of about $1.5 trillion, was presented by the company in response to the attorneys general's filings on how penalties should be calculated if they win at trial. However, Meta has disputed this amount, claiming it is not supported by evidence and "has no analog in the history of consumer protection enforcement."
Calculation method
States involved in the case and penalty calculations
The states involved in the case, California, Colorado, Kentucky, and New Jersey, are using a specific method to calculate penalties. They are multiplying the number of alleged violations by fine amounts set by state law. The number of violations is based on how many teens and young users are believed to have been affected by Meta's actions.
Denial of charges
Meta denies allegations of misleading consumers
Meta has denied allegations, arguing that attorneys general have no evidence of it misleading consumers about its platforms' alleged addictiveness. The company contends that "social media addiction" is not a recognized psychiatric condition, and therefore claims that its platforms were not addictive cannot be false.
Trial details
Details about upcoming trial in August
The upcoming trial in August will be presided over by US District Judge Yvonne Gonzalez Rogers. It will address all claims under the federal Children's Online Privacy Protection Act (COPPA), including those from California, Colorado, Kentucky, and New Jersey. The states allege that Meta violated their laws protecting consumers by misleading them about the safety of its platforms.
Other allegations
Additional lawsuits against Meta by other states
In addition to the four states involved in the August trial, another 25 states have sued Meta in federal court. Most of these lawsuits allege that the company violated COPPA by collecting data from children without proper parental consent. A separate trial will be held in February for 14 states that have brought claims under their own laws.