Meta Platforms is in discussions to settle a landmark lawsuit with 29 US states, with potential payouts ranging from $12 billion to $18 billion. This proposed settlement aims to resolve claims that the company deliberately designed Facebook and Instagram with addictive features that negatively impact the mental health of teenagers. The talks emerged during the second week of a federal trial in Oakland, California, where states are seeking substantial financial penalties and mandatory changes to Meta's platform operations.
The lawsuit accuses Meta of violating state consumer protection laws and federal privacy laws, specifically the Children's Online Privacy Protection Act (COPPA), by collecting data on users under 13 without parental consent. Meta has previously estimated its potential liability in the case could reach an unprecedented $1.4 trillion, a figure close to its market capitalization, while the states' estimate for damages was around $200 billion. The company has denied the allegations, asserting that the states are seeking unreasonable design changes and an "outlandish payout."
During the initial week of the trial, testimony included Instagram head Adam Mosseri and current and former Meta employees who contributed to platform design and studied teen user interactions. Prior to these ongoing discussions, Meta has faced other legal setbacks, including a $375 million verdict in New Mexico in March 2026 and a $567 million court order in August 2026. Additionally, the company paid $9 million as part of a $27 million settlement with Breathitt County Schools in Kentucky in May 2026. The current federal case involves 29 states pushing for significant operational changes to Meta's platforms.
