Meta's $16.7 billion settlement in a federal social media addiction case represents a dramatic concession for the social media company after years of fending off attacks from state litigators. There could be much more to come.
The settlement announced on Wednesday with California Attorney General Rob Bonta and a bipartisan group of 51 AGs, including some from U.S. territories, leaves Meta exposed to ongoing litigation stemming from similar allegations and regulatory constraints that could follow.
"It is not preemptive in any way," Bonta said in a press conference on Wednesday. "It's a floor conceptually, not a ceiling."
Based on the way Meta set up the trial, it looks to some like the company got off easy, particularly given its $1.5 trillion market cap. Meta's attorneys had warned that the consolidated state AG trial could lead to damages as high as $1.4 trillion, while lawyers representing the states suggested that $200 billion was a more likely amount.
The settlement landed just over a week after opening arguments kicked off. The only notable Meta executive to testify was Instagram chief Adam Mosseri, who took the stand towards the end of the day on Tuesday. Meta CEO Mark Zuckerberg was slated to potentially testify later in the trial.
Florida AG James Uthmeier criticized the payout, telling CNBC in an interview that it "was definitely a win" for Meta.
"A few weeks of revenue, that's not enough here when you're talking about a company of this size," Uthmeier said. He noted that Florida is still pursuing its own similar lawsuit against Meta.
"We'll go to court, we like to fight for our kids in Florida," Uthmeier said. "We're not going to bend over and capitulate."
Texas was not part of the group settlement either, but agreed to a $1 billion payment separately.
Beyond the money, Meta must make changes to its apps like Facebook and Instagram as part of the "consent judgement," which the federal court in Oakland, California approved Wednesday afternoon. Those changes include daily usage limits and "nighttime blocks" for teenagers who use the company's apps, "enhanced age assurance measures" that would prevent children from using them, and the creation of additional tools for parents and guardians.
Meta said the participating states in the settlement will receive roughly $12.7 billion over a 10-year period. They have the potential to receive the remaining $5.3 billion from rivals like Google's YouTube and TikTok as long as those companies agree to implement similar changes like daily time limits for kids and age-assurance measures.
Google and TikTok didn't respond to requests for comment.
'Continue to fight'
Lawmakers could still impose additional regulations on Meta and the broader social media industry. There's a consolidated case involving personal injury claims and a separate federal case with a group of nationwide school districts. Attorneys representing those groups all said they plan to continue litigation against Meta and its peers.
"Thousands of young people and public-school districts still have claims pending in the MDL against Meta, as well as TikTok, Snap and YouTube, and we stand ready to continue that fight," attorneys representing school districts said in a joint statement, referring to the multidistrict legislation. "We will not rest until every one of these plaintiffs sees justice for the harms caused by all of the defendants' platforms."
TD Cowen analysts said in a note on Wednesday that they consider some of Meta's "legal stock overhang to be resolved."
However, "significant additional civil liability remains given pending lawsuits from both school districts and individuals," they wrote.
Jayne Conroy, an attorney at Simmons Hanly Conroy, argued against YouTube during a social media personal injury trial in Los Angeles earlier this year. She characterized the settlement as "gigantic," potentially influencing more companies than just Meta.
"This is a recognition by Meta that they need to change their practices, and that is what is so enormous about this case," Conroy said. "The other giants are going to need to fall in line as well because Meta is clearly leading the way in all of these changes that need to take place."
Conroy added that while Meta isn't admitting liability, the company is "changing their practices at enormous expense to them."
"It's verification that they shouldn't have been doing this to minors, they shouldn't have been exploiting them, they shouldn't have been addicting them," Conroy said. Rob Lalka, a professor at Tulane University's business school, said that because of the settlement, "our children will be protected from some of the worst aspects of Meta's platforms."
"No one should be celebrating Meta for doing the right thing," Lalka said. "They had to be dragged to court, and it was not going well for them."
Bonta said Meta's settlement "gives notice to others in the industry that we're not done, and we expect similar outcomes from them as well."
"As big as Meta is, it doesn't stand alone," Bonta said. "We're continuing our fight across social media, including our litigation against TikTok, and we'll continue to demand better from all parts of this industry through our ongoing work with the legislature."
WATCH: Meta reaches settlement in landmark teen social media trial.
