Meta Platforms enters the defining legal battle of its corporate history this week as a federal trial in Oakland, California, opens over allegations that Facebook and Instagram were deliberately engineered to addict children, according to an AP-PTI report. The lawsuit, filed by dozens of US states three years ago, seeks financial damages that could total as much as $1.4 trillion — nearly the entire market capitalisation of the Menlo Park, California-based company — along with court-ordered changes to how Meta operates both platforms.
States seek $1.4 trillion in damages
The trial, which begins Tuesday in federal court in Oakland, features four states as plaintiffs: California, Colorado, Kentucky and New Jersey. The other 25 states that joined the original lawsuit are expected to have their trials later, the report said.
The lawsuit accuses Meta of contributing to the youth mental health crisis by knowingly and deliberately designing features that get children addicted to its platforms, according to the report. It also claims Meta routinely collects data on children under 13 without parental consent, violating federal law, the report said.
Meta has harnessed powerful and unprecedented technologies to entice, engage, and ultimately ensnare youth and teens. Its motive is profit, and in seeking to maximise its financial gains.
— the lawsuit, as quoted in the AP-PTI report
Meta disputes allegations
Meta said it disputes the allegations and that trial evidence will show its commitment to supporting young people, according to the report. "We've listened to parents, worked with experts and law enforcement, and conducted in-depth research to understand the issues that matter most," the company said in a statement, the report said.
Meta has already lost two pivotal cases over harms to children and teens this year, and last month reported a rare profit decline, in part due to $2.4 billion in legal expenses, the report said. The $1.4 trillion figure, which Meta disclosed in a legal filing, is almost as high as the company's entire stock market value, according to the report. Paying it would inevitably put Meta in bankruptcy and perhaps under state ownership, the report said.
Meta called the possible penalty "untethered to any claimed violation" by the states, the report said. In a July 6 filing with the US District Court for the Northern District of California, Meta said: "A sanction of that size has no analog in the history of consumer protection enforcement," according to the report.
Legal experts question feasibility of maximum penalty
Legal experts quoted in the report doubt that a penalty anywhere near that amount would be imposed. Eric Goldman, professor and co-director of the High Tech Law Institute at Santa Clara University School of Law, said the state attorneys general are going for the gusto, the report said.
The state attorneys general are going for the gusto. They are trying to set the definitive precedent in this case and they have asked for extraordinary damages and they are going to seek extraordinary structural remedies if they succeed.
— Eric Goldman, professor and co-director of the High Tech Law Institute at Santa Clara University School of Law
James Grimmelmann, a law professor at Cornell Law School and Cornell Tech, said it is not plausible that Meta could pay that sum, according to the report. "It's not plausible in the sense that Meta doesn't have that much money and could not get it. An award that large would put Meta into bankruptcy, wipe out its owners, and effectively result in the states owning Meta." He added that as a practical matter, "that seems extremely unlikely to happen," the report said.
Courts in other high-damages cases have stopped short of maximum penalties, the report said. In the Anthropic artificial intelligence training case, plaintiffs claimed $150,000 per book that Anthropic copied, but the penalty ended up being $3,000 per book, totalling about $1.5 billion, according to the report.
Earlier cases set context for social media liability
Earlier this year, a state court in Los Angeles awarded $6 million in damages from Meta and Google's YouTube to a single plaintiff, a young woman who testified she became addicted to social media as a child, the report said. That case was a bellwether, or test case, picked from thousands of lawsuits, according to the report.
The report does not specify the claimed amount in that case, but the comparison with the Anthropic award illustrates how courts have historically reduced requested penalties.
| Case | Claimed damages | Final penalty |
|---|---|---|
| Anthropic AI training case | $150,000 per book | $3,000 per book; about $1.5 billion total |
| Los Angeles social media addiction case | Not specified in report | $6 million |
For Meta, the stakes extend beyond the courtroom. The company's July legal filing and its recent profit decline, driven partly by $2.4 billion in legal expenses, indicate the financial weight of the litigation, according to the report. The trial in Oakland will determine whether the states' sweeping structural remedies — or a penalty far below the theoretical maximum — become the benchmark for social media platforms facing similar allegations.
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