Meta Platforms has agreed to pay up to $16.68 billion to settle allegations by 29 U.S. states that it designed Facebook and Instagram to be addictive to children, misled the public about the safety of its platforms and unlawfully collected personal data from minors.
Reuters reported that the settlement was disclosed in a court filing on Wednesday.
Under the agreement, Meta will be required to introduce daily time limits and overnight restrictions for teenage users of Facebook and Instagram across the United States.
The company will also strengthen its age-verification systems to prevent underage children from accessing the platforms and expand parental control features.
The parties agreed to waive their rights to appeal once the court enters a final judgment.
Meta denied wrongdoing in agreeing to the settlement.
The agreement emerged during a federal trial in Oakland, California, before U.S. District Judge Yvonne Gonzalez Rogers.
California Attorney-General Rob Bonta and his counterparts from Colorado, New Jersey and Kentucky jointly led the litigation on behalf of the 29 states.
The states had accused Meta of violating federal laws, including the Children’s Online Privacy Protection Act, which restricts online platforms from collecting personal information from children without parental consent.
The four lead states also pursued additional consumer protection claims under their respective state laws.
The states had sought both financial penalties and broad changes to Meta’s platforms.
Before the trial, Meta said in court filings that its potential financial exposure could be as high as $1.4 trillion, while the states’ attorneys-general estimated a more realistic figure of about $200 billion.
The trial had already featured testimony from Instagram chief Adam Mosseri, as well as current and former Meta employees involved in platform design and research into teenage user engagement.
Meta founder and Chief Executive Officer, Mark Zuckerberg, had also been expected to testify.
California Deputy Attorney-General Megan O’Neill told the jury that Meta’s business model was designed to attract users, keep them on its platforms for as long as possible, collect their data and conceal information from the public.
The settlement is part of a broader legal challenge facing Meta and other major social media companies.
More than 3,000 lawsuits against Meta and other technology companies have been consolidated before Judge Gonzalez Rogers.
Meta, Snap, Alphabet, the parent company of YouTube, and ByteDance, the parent company of TikTok, are facing thousands of cases alleging that they deliberately designed their platforms with features intended to keep young users engaged for extended periods.
A separate trial involving claims brought by a U.S. state against Meta has also been ongoing in Nashville since July.
Meanwhile, Meta shares rose by 4.4 per cent in premarket trading following news of the settlement.
The proposed settlement, subject to final court approval, represents one of the most significant legal actions involving allegations over the impact of social media platforms on children and teenagers.
