29 states join forces! Meta is accused of "inducing addiction," facing a maximum penalty risk of $1.4 trillion

According to Zhitong Finance APP, Meta (META.US) will head to court on Tuesday for a high-stakes showdown with a coalition of attorneys general from multiple states. The plaintiffs accuse the company of intentionally designing Facebook and Instagram to induce compulsive use (addiction) among teenage users.

For one of the world's most valuable tech companies, this case carries significant risks. Attorneys general from 29 states are not only seeking hefty financial penalties but also court injunctions to force Meta to change the way it operates its platforms.

The jury trial taking place in the federal court in Oakland, California, is set against the backdrop of a global backlash against social media companies. There is growing concern that these companies are profiting at the expense of teenage users, and an increasing body of research suggests that excessive use of these algorithm-driven platforms may have harmful effects on the health of adolescents.

While agencies in Australia and Europe have implemented or proposed sweeping bans on youth engagement over the past year, legislative efforts in the United States have had limited impact, making the courts a critical battleground.

This trial for Meta is particularly significant as it focuses on alleged violations of state consumer protection laws and federal privacy laws—each violation could incur a maximum fine of $20,000, and when multiplied by millions of teenage users on Instagram and Facebook, the penalties could quickly accumulate.

According to Meta's own calculations, if it loses this trial, it could face penalties of up to $1.4 trillion, a figure close to its total market value and unprecedented in legal history.

Eric Goldman, a professor specializing in internet law at Santa Clara University School of Law, stated, "The stakes in this case couldn't be higher."

Although the attorneys general have not publicly disclosed the exact penalties they are seeking, California attorney Megan O'Neill indicated during a court hearing last week that the figure is closer to $193 billion, noting that Meta's highest theoretical amount was aimed at creating a "shock effect."

Even this lower amount would be one of the largest settlement amounts in history, comparable to the $206 billion settlement reached in 1998 between state attorneys general and tobacco companies over addiction issues.

Potential Legal Risks

Other social media giants—such as Google under Alphabet (GOOGL.US), Snap Inc., and TikTok—are not involved in this trial. However, like Meta, they also face over 3,000 personal injury lawsuits initiated by individuals and families in the U.S., as well as approximately 1,300 lawsuits brought by public school districts nationwide, posing potential risks amounting to billions of dollars. Some of these cases have already settled to avoid trial, and more landmark cases are expected in the coming months The lawyers behind the case gained support in court by arguing that the product itself—through its design and functionality—caused harm, rather than directly targeting the content itself, as platforms typically enjoy broad immunity from legal liability regarding content.

This litigation strategy, years in the making, achieved success in its first test in March of this year. At that time, a jury in Los Angeles awarded $6 million to a 20-year-old woman who claimed that her continuous use of websites, including Meta's Instagram and Google's YouTube, over more than a decade led her to develop anxiety, depression, and body dysmorphic disorder.

"Outrageous Compensation"

Meta denied the allegations from various states and accused the state attorneys general of seeking unreasonable design modifications and "outrageous compensation."

In this trial, the jury served only in an advisory capacity. U.S. District Judge Yvonne Gonzalez Rogers will ultimately decide whether Meta engaged in illegal conduct; if so, what penalties and remedies will be imposed.

The attorneys general from California, Colorado, Kentucky, and New Jersey, leading the case, accused Meta of knowingly designing features that encourage compulsive and prolonged use of its platform among teenagers while misleading consumers about the platform's safety features.

A broader bipartisan coalition covering 29 states accused the company of collecting simple data from users under the age of 13, violating the federal Children's Online Privacy Protection Act (COPPA).

Younger Users

In addition to seeking a court order to limit young users on Meta's platforms, the states also sought to compel the company to remove allegedly addictive features such as infinite scrolling and content recommendation systems.

California Attorney General Rob Bonta, a Democrat, stated in a press release: "We are ready to hold Meta accountable for its role in fueling the mental health crisis among children in America and look forward to the trial."

In a statement, Meta responded that while the state attorneys general have touted this case as a landmark case, "their limited allegations are factually baseless and their financial demands are extremely disproportionate."

The company stated: "The state attorneys general cannot provide any evidence that anyone in their states was misled, instead claiming that having additional Instagram accounts and other harmless features somehow harmed local residents, and attempting to penalize Meta for common challenges faced by the entire industry, such as age verification."

After opening statements on Tuesday, the trial is expected to last about five weeks. Meta co-founder and CEO Mark Zuckerberg and Instagram head Adam Mosseri are scheduled to testify, along with dozens of other witnesses, including current and former Meta employees, as well as experts in technology and psychology.

Before this trial, Meta had just suffered a nearly $1 billion blow in a lawsuit filed by the New Mexico Attorney General A state court judge in Santa Fe compared Meta to a polluting factory and ordered the company to make changes to its platform, including time limits and push notifications for young users. Meta was ordered to pay approximately $375 million in civil fines and $567 million to improve the harm caused to the state's youth by social media.

"Public Harmful Behavior"

The ruling is a significant test of the legal theory behind the attorney general's lawsuit: that social media companies engage in "public harmful behavior" that harms the public interest. This theory has previously been used in public health lawsuits against major tobacco companies and opioid manufacturers.

This case in Oakland will test similar legal grounds in federal court on behalf of multiple states.

Last week, Meta's emergency application to stay the trial submitted to the appellate court was unsuccessful. The company argued that the trial should wait for clarification from the U.S. Ninth Circuit Court of Appeals on whether the attorney generals' allegations are protected by the federal Communications Decency Act Section 230, which provides broad legal shields for lawsuits against internet platforms.

Approximately 14 other states are independently initiating social media harm lawsuits against Meta in their respective state courts. The trial of a case filed in Nashville, Tennessee, is nearing its conclusion.

Minda Smiley, a senior analyst at research firm Emarketer focused on social media, stated that the prospect of over a trillion dollars in penalties "is more symbolic at this stage."

She said, "This represents the severity of the allegations facing Meta. It is becoming increasingly clear that these lawsuits could not only have a substantial impact on Meta's business but also fundamentally change the way its platform operates."

The case number is: People of the State of California v. Meta Platforms Inc., 23-cv-05448, with the court being the U.S. District Court for the Northern District of California (Oakland)