Meta Platforms has agreed to pay as much as $16.68 billion and introduce significant changes to Facebook and Instagram to settle allegations by U.S. states that the company designed its platforms to encourage addictive use among children, misled consumers about their safety, and improperly collected children’s personal information.
The agreement announced Wednesday resolves claims brought by 29 states and brings an end to a federal trial that had become one of the most prominent legal tests of allegations that social media companies have contributed to harm among young users.
Meta denied wrongdoing as part of the settlement.
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Under the agreement, Meta will introduce daily usage limits for children using Facebook and Instagram and restrict their access to the platforms during nighttime hours. The company will also strengthen measures designed to prevent children from accessing content subject to age restrictions.
The settlement comes as Meta faces a much broader legal campaign over the design of its platforms and their impact on children and teenagers.
The litigation has brought together state governments, local authorities, school districts and individual users who allege that Meta and other major social media companies knowingly developed features that encouraged prolonged and compulsive use, contributing to a nationwide youth mental health crisis.
Meta shares rose 2.3% in early trading following news of the agreement.
The federal trial in Oakland, California, involved claims brought by California, Colorado, Kentucky, and New Jersey alleging that Meta violated state consumer-protection laws.
It also covered claims from 29 states alleging that Meta violated the federal Children’s Online Privacy Protection Act by collecting personal information from users it knew were children without obtaining parental notification or consent. The states also alleged that Meta used children’s data to train machine-learning and generative AI systems, adding a significant technology and privacy dimension to the case.
Meta has disputed the characterization of its platforms as inherently addictive. The company has argued that it could not have misled consumers by denying that its services were addictive because “social media addiction” is not formally recognized as a psychiatric condition.
The financial exposure in the case had been potentially enormous.
Before the trial began on Aug. 18, Meta said California, Colorado, Kentucky and New Jersey were seeking as much as $1.4 trillion in penalties. The states indicated that their potential claims were more likely to total about $200 billion.
The settlement removes the immediate uncertainty associated with those claims while imposing new operational requirements on Facebook and Instagram. The agreement also resolves separate privacy lawsuits brought by California, Illinois, New Mexico and Washington, D.C., related to the Cambridge Analytica scandal.
Those jurisdictions will receive $459.3 million under the settlement.
The Cambridge Analytica cases relate to the collection of personal information from millions of Facebook users by the political consulting firm, which became one of the defining privacy controversies in the history of social media.
The broader youth-safety litigation remains a significant threat to the social media industry. Meta, Snapchat owner Snap, YouTube parent Alphabet and TikTok owner ByteDance continue to face thousands of lawsuits in federal and state courts alleging that their platforms were deliberately designed to keep children and teenagers engaged in ways that could harm their mental health.
A separate trial brought by Tennessee against Meta began last month in Nashville.
The federal cases have been consolidated before U.S. District Judge Yvonne Gonzalez Rogers in Oakland and include claims from individual users, school districts and state governments.
Meta’s legal exposure has already increased following major losses in New Mexico. Earlier this year, the company lost both phases of a landmark lawsuit brought by the state. A jury in March ordered Meta to pay $375 million after finding that the company had misled consumers about the safety of its platforms.
On Aug. 6, a judge separately found that Meta had created a public nuisance and ordered the company to pay another $567 million while implementing measures intended to improve youth safety.
The company has faced challenges in individual lawsuits as well.
In March, the first trial involving an individual’s claims against Meta and Google ended with a verdict for the plaintiff. A Los Angeles jury found the companies liable for contributing to Kaley G.M.’s depression and anxiety and ordered them to pay a combined $6 million in damages.
Meta and Google have said they will appeal those verdicts.
The latest settlement therefore represents more than a financial resolution as it could require changes to how Meta manages children’s access to its platforms, monitors usage and handles age-sensitive content and personal information.
But the agreement also reduces the immediate risk associated with a case in which potential penalties had reached extraordinary levels, though it does not remove the broader legal challenge facing the company or the wider social media industry.
The litigation is now forcing technology companies to defend not only the content users encounter on their platforms but also the underlying design choices that determine how frequently users return, how long they remain engaged, and how their data is collected and used. That issue could become consequential as platforms integrate more sophisticated recommendation systems and generative AI into products used by children and teenagers.
However, the settlement is another consequence of the growing regulatory scrutiny of social media platforms over treatment of young users. Meta has denied wrongdoing, but the scale of the agreement and the operational restrictions it accepts show the extent to which youth safety has become a major legal and business risk for the company.
While the settlement closes the federal trial involving the 29 states, Meta’s wider litigation over youth safety and privacy is far from over.