Meta Ordered to Pay $25 Billion for Deceiving Users About Privacy on Facebook

A judge in the United States has ordered Meta to pay New Mexico $25 billion after a jury found the company liable for deceiving users about privacy and content moderation policies on Facebook. Judge Francis Mathew handed down the amount on Wednesday, following the jury verdict in the case brought by the state of New Mexico.

State Attorney General Raúl Torrez described the amount as "one of the largest, if not the single largest state verdict against a company in American history." At a news conference he said, "This judgement should be a signal, an unambiguous message, to Silicon Valley." Torrez said the verdict should be a warning for tech companies and that New Mexico would continue to hold them accountable.

Under the New Mexico Constitution, fines for violations of consumer protection laws go to state education spending. "We may have paid for the construction of schools for the next 100 years," Torrez said, while acknowledging that the money would be tied up if Meta appeals, as expected. Representatives for Meta did not immediately respond to a message seeking comment about the amount. The Menlo Park, California-based company was scheduled to report its quarterly earnings on Wednesday afternoon, and its shares were trading 2 percent higher following the penalty announcement.

Jurors in September found Meta liable for over 43 million violations of New Mexico consumer protection laws from the period when political consulting firm Cambridge Analytica harvested Facebook user data to generate targeted political ads. Meta has previously said it plans to appeal the September verdict.

At the centre of the case was a data breach stemming from a third-party personality quiz. Through that quiz, data from roughly 87 million profiles was harvested and sold to political consulting firm Cambridge Analytica to generate targeted ads. The now-defunct firm's clients included the 2016 campaign for President Donald Trump.

New Mexico walked the rest of the road alone. Forty-eight other states signed a nationwide settlement with Facebook in August for $18 billion; apart from Florida, New Mexico was the only state that did not sign and instead took the company to trial. That settlement also included an agreement to release Meta from future liability related to the Cambridge Analytica privacy breach.

The two sides were worlds apart on the amount. Attorneys for New Mexico had sought $35 billion to $40 billion, arguing the company would only change its ways with a sum that affected its stock price. Meta's lawyers argued for no more than $3.4 billion, saying an award ten times that or even more would violate due process, would be unconstitutional and would not hold up on appeal.

In court, Meta attorney Matt Nicholson argued that a sum as high as $40 billion would be "shocking to the conscience", while an attorney for New Mexico, Randi McGinn, urged standing up to "tech titans who think they are bulletproof and can do whatever they want." At an October 1 hearing Nicholson also said, "The jury did not make findings that any New Mexican heard or saw these statements, or was harmed by them."

During the trial, jurors assessed whether Facebook misled users about privacy and content moderation on 34 separate occasions. State prosecutors argued that Facebook's statements deceived the entire population of New Mexico and extended beyond social media users. In the end jurors agreed with that premise — finding 2.1 million violations on certain counts and bringing the total number of violations to over 43 million.

New Mexico prosecutors also argued that Facebook allowed misinformation or violent content to proliferate on the platform. Defense attorneys vehemently denied the allegations, saying the company's content moderation policies are robust and freedom of speech has to be considered. In his video deposition, chief executive Mark Zuckerberg denied that the company profited from harmful content and said it has to carefully balance freedom of speech with content moderation. The defense also had one win: jurors found the state did not prove that Facebook made false claims about removing harmful content, including misinformation about the COVID-19 pandemic.

In subsequent court filings, Meta's attorneys have argued that the state's consumer protection laws don't apply to people in New Mexico who weren't using the platform at the time. On appeal, the number of violations — and therefore the total penalty — could be reduced, though interest on the penalty would accrue during the appeal. The company's lawyers called it unprecedented for a state to count violations based on how many individuals may have heard or seen the misleading statements, arguing there was no evidence the statements ever harmed anyone.

In closing arguments, Facebook's lawyers said the state's evidence was outdated and that despite having five years to gather material, New Mexico found only one other instance of a data breach. They also said the company has adapted its policies since the lawsuit was filed in 2021 and removes 99 percent of content that violates its standards. Torrez told reporters that all money awarded will go into a fund for the state's education system, and the state is also seeking an injunction to stop similar practices. The next battle is now in the appeals court — where it will be decided how much of this record penalty survives.