Meta's $16.7B deal puts new limits on teens' Facebook, Instagram use

On Tuesday, the four states suing Meta for allegedly misleading the public about the risks of teen social media use presented Instagram product design director Francesco Fogu with a 2023 slide deck he'd co-authored about the company's strategy for responding to government regulations. One slide, which Fogu said he didn't remember writing, said, "Sometimes we don't comply and accept a fine."

The bill arrived early the next morning in the form of a settlement worth up to $16.7 billion.

Meta denied liability under the agreement, which resolves claims by the four states at trial, two dozen more that brought claims under the Children's Online Privacy Protection Act and nearly 20 others not named in the lawsuit. In addition to payments spread over 10 years, Meta agreed to overhaul its account settings for teen users.

"My inclination is to grant it," Chief U.S. District Judge Yvonne Gonzalez Rogers told the parties when they convened in court Wednesday morning. "I did get it at 6 a.m. this morning."

Under the agreement, Meta will pay the states a combined $1.2 billion a year for 10 years, with additional payments required if other major social media platforms adopt similar changes. The additional payments are triggered on a state-by-state basis and total $500 million a year if comparable measures are adopted nationwide.

For the first five years of the agreement, users between the ages of 13 and 17 will be limited by default to two hours a day across Instagram and Facebook, and one hour a day for the following five years. Teens will be barred from the platforms late at night -- between midnight and 6 a.m. for the first five years and between 10 p.m. and 7 a.m. for the following five years.

By default, teen accounts also won't receive notifications during school hours or display popularity metrics, including the number of likes and views on a given post.

Each of those settings can be overridden by a parent.

Meta also agreed to implement a platform-wide age verification system to detect under-13 users as well as under-18 users posing as adults. The settlement requires Meta to either develop its own detection system comparable to the leading commercially available option or enlist a third party to do so. The system will be subject to annual third-party testing.

In a statement, California Attorney General Rob Bonta said he believes the changes will protect teens from the harms of excessive social media use.

"Today, we have secured a settlement with Meta that will make social media less dangerous for our kids and make a world of a difference for children and their families," Bonta said. "Meta has agreed to make massive transformations that will reduce the risk of harm from its platforms."

Meta said the changes will set a new industry standard for teen safety and urged competitors TikTok and YouTube to adopt similar measures.

"Our new Time Limit commitments, Night Mode features and usage limits during school hours set the right path forward for our whole industry, but this framework will only work if all our peers join us," Meta Chief Legal Officer C.J. Mahoney said in a statement.

California, Colorado, Kentucky and New Jersey sued Meta for allegedly violating consumer protection laws by misrepresenting the risks of adolescent social media use to the public. They were joined by two dozen states alleging Meta violated COPPA by collecting data on under-13 users without parental consent.

The case went to trial in Oakland in mid-August. Jurors heard testimony from a pair of Meta whistleblowers, the plaintiffs' psychology expert and Fogu before the settlement was reached. Instagram chief executive Adam Mosseri took the stand briefly at the end of Tuesday's proceedings and was scheduled to return Wednesday.

Instead, Gonzalez Rogers spent Wednesday morning questioning the parties about the agreement. While she largely supported it, the judge expressed concerns about potential backdoors to circumvent the new parental controls and how the restrictions would apply to teens whose parents are unwilling or unable to monitor their accounts.

She also questioned the likelihood that the contingent payments would be triggered, given that the other social media companies are not parties to the lawsuit. The parties responded that various states have pending actions against those companies or are pursuing legislation that could impose similar requirements.

But Gonzalez Rogers said she would not prolong immensely complicated litigation "for a tweak" and suspended the trial.

"I think it's an excellent way to resolve these issues," the judge said. "But when the court gets a document at 6 a.m., it's good to make sure I take a closer look."

She entered the consent judgment later Wednesday.

Meta was represented at trial by Covington & Burling LLP and Wilkinson Stekloff LLP.

Meta, Snap, YouTube and TikTok still face claims from hundreds of school districts and individuals over similar allegations, also before Gonzalez Rogers. All four defendants settled with the first bellwether plaintiff in that litigation, Breathitt County Schools in Kentucky, ahead of a trial that had been scheduled for June. The next bellwether trial is scheduled for February 2027.

The companies also face coordinated social media addiction litigation in Los Angeles Superior Court. In March, a jury awarded an individual bellwether plaintiff $6 million against Meta and YouTube; Snap and TikTok settled before trial.

People of the State of California, et al. v. Meta Platforms Inc., et al., 4:23-cv-05448 (N.D. Cal.), is part of In re: Social Media Adolescent Addiction/Personal Injury Products Liability Litigation, 4:22-md-03047 (N.D. Cal., filed Oct. 6, 2022).