Aug 26 (Reuters) - Meta Platforms agreed to pay a maximum $16.68 billion and make major changes to Facebook and Instagram to resolve claims by states across the U.S. that the company designed those platforms to addict children, misled consumers about their safety and improperly collected children's personal data.
The settlement resolves claims brought by 29 U.S. states, and will end a federal trial that had been one of the highest-profile tests yet of allegations that social media companies harmed young users.
Meta will impose daily usage limits and restrict nighttime usage by children who use Facebook and Instagram, and enhance measures to prevent children from accessing age-restricted content.
The Menlo Park, California-based company denied wrongdoing in agreeing to settle.
Wednesday's settlement also resolves lawsuits by California, Illinois, New Mexico and Washington, D.C., over privacy claims related to the Cambridge Analytica scandal, where the consulting firm collected personal data of millions of Facebook users. Those states will receive $459.3 million to resolve those lawsuits.
Shares of Meta rose 2.3% in early trading.
The claims were part of a broader wave of litigation brought by states, local governments, school districts and individuals alleging that Meta and other social media companies fueled a nationwide youth mental health crisis.
The trial in the Oakland, California, federal court covered claims from California, Colorado, Kentucky and New Jersey that Meta violated their state laws protecting consumers.
It also covered claims from 29 states that Meta violated the federal Children's Online Privacy Protection Act by collecting personal data from users it knew were children without parental notification or consent, and using the data to train machine learning and generative AI models.
Meta has long argued it could not have misled consumers about whether its services were addictive because "social media addiction" is not a recognized psychiatric condition.
Before the trial began on August 18, Meta said California, Colorado, Kentucky and New Jersey were seeking up to $1.4 trillion in penalties. The states suggested that the figure would be closer to $200 billion.
A MENTAL HEALTH CRISIS
Meta, Snapchat and its parent Snap, YouTube and its parent Alphabet, and TikTok and its parent ByteDance still face thousands of lawsuits in federal and state courts over claims they knowingly designed their platforms to have features that addict children and teenagers, fueling a mental health crisis.A trial in Nashville over claims brought by Tennessee against Meta began last month.
The federal cases were consolidated before U.S. District Judge Yvonne Gonzalez Rogers in Oakland, and include lawsuits brought by individuals, school districts and state governments.
Earlier this year, Meta lost both phases of a landmark lawsuit brought by New Mexico. A jury in March ordered it to pay $375 million after finding it had misled consumers about the safety of its platforms. On August 6, a judge found Meta had created a public nuisance and ordered it to pay an additional $567 million and implement youth-safety measures.
Also in March, the first trial over an individual’s claims against Meta and Google ended with a verdict in the plaintiff's favor. A Los Angeles jury found the companies liable for plaintiff Kaley G.M.'s depression and anxiety and ordered them to pay a combined $6 million in damages.
The companies have said they will appeal those verdicts.
(Reporting by Diana Novak Jones, Editing by Alexia Garamfalvi, Jamie Freed and Mark Porter)
