Meta Platforms (NASDAQ:META) is defending itself in multiple court cases, facing allegations that the company’s social media platforms are harmful and addictive to consumers, especially younger users.
A trial coming next month is targeting penalties equal to nearly the entire market capitalization of Meta Platforms.
Meta’s August Lawsuit
The parent company of social media apps like Facebook and Instagram, Meta finds itself defending the alleged addictive nature that makes these platforms popular with young users.
A case set for trial in California in August sees the states of California, Colorado, Kentucky and New Jersey arguing that the company designed Facebook and Instagram to be addictive in nature, according to a report from Fox Business.
At center stage of the upcoming case is the Children’s Online Privacy Protection Act, which the four states say was violated. The states allege that Meta illegally collected data without parental consent from the children who used their aps and platforms.
The suit also claims that Meta lied to the public about potential harm the Facebook and Instagram apps could have on young users.
Meta has denied the accusations and said that it’s marketing of the apps to all users, including older children and adults shows it didn’t violate the Children’s Online Privacy Protection Act.
In a court filing Monday it was revealed that the four states are seeking damages of $1.4 trillion in penalties in the case. This amount would equal nearly the entire $1.5 trillion market capitalization currently commanded by Meta Platforms.
The $1.4 trillion figure is based on the state attorneys general and the amounts they believe the company should pay if the states win the lawsuit. The report says the amounts were calculated by multiplying the fine by the number of violations under state law. The number of violations in these cases equals the number of young users in each impacted state.
Meta said the amount is unprecedented.
"A sanction of that size has no analog in the history of consumer protection enforcement," Meta said in a filing.
The company also expressed its disagreement with moving the case forward after being told it would not be dismissed.
“We strongly disagree with these allegations and are confident the evidence will show our longstanding commitment to supporting young people,” a Meta spokesperson told Fox Business at the time.
The trial is set to begin on Aug. 18.
Meta’s Growing Legal Challenges
This lawsuit, set for next month, is far from the only legal challenge Meta has faced or will face. The company has been sued by about 30 states in federal court, with many states alleging that Meta violated the Children’s Online Privacy Protection Act.
Fourteen states have also brought claims under state law against Meta Platforms. Those arguments will be part of a separate trial set for next year.
A jury awarded $375 million to the state of New Mexico in a battle against Meta Platforms that found the company misled consumers in the state. A second part of the case that could see a judge rule that Meta has to make changes to its apps is still underway.
Meta could appeal the ruling and also said it has considered withdrawing Facebook and Instagram from the state of New Mexico.
In March, Meta and YouTube, which is owned by Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL), were found liable in a New Mexico case brought by a 20-year-old. The case found the jury ruling in favor of the plaintiff that the company’s apps had been purposefully designed to be addictive and caused harm to children. The jury awarded the plaintiff $3 million from each company.
Meta is not the only social media company facing legal challenges. Snap Inc (NYSE:SNAP), TikTok and YouTube have all been targeted in lawsuits from federal and state courts.
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