Meta says US states are seeking $1.4 trillion in penalties in August youth safety trial

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People walk behind a logo of Meta Platforms company, during a conference in Mumbai, India, September 20, 2023. REUTERS/Francis Mascarenhas Purchase Licensing Rights, opens new tab

• Summary

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• Penalties were calculated based on state laws in Colorado, California, Kentucky and New Jersey

• Meta says the number is not supported by evidence

• The company faces thousands of claims over addictive features

July 6 (Reuters) - Meta Platforms (META.O), opens new tab said in a court filing on Monday that four states were seeking $1.4 ​trillion in penalties over accusations the company designed its Facebook and Instagram platforms to addict young users and misled the ‌public about their safety.

Meta put forward the figure in its response to the attorneys general's filings on how penalties should be calculated if the states prevailed at trial.

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The number, which has not previously been disclosed and is close to Meta’s market capitalization of around $1.5 trillion, comes ahead of an August trial in Oakland, California over ​the claims brought by California, Colorado, Kentucky and New Jersey against the company.

Meta said the amount was unsupported by the evidence.

"A ​sanction of that size has no analog in the history of consumer protection enforcement," the company said in ⁠the filing.

Representatives for the attorneys general did not immediately respond to requests for comment after the filing.

TALLYING DAMAGES

The states' filings are sealed, but ​at a court hearing in June they said they were calculating the penalties by multiplying the number of violations by fine amounts set by state law. The ​number of violations is based on the estimated number of teens and young users affected by Meta's actions, the states said.

Twenty-nine states have sued Meta in federal court, most of them alleging the company violated the federal Children's Online Privacy Protection Act by collecting data from children without proper parental consent. The trial in August ​before U.S. District Judge Yvonne Gonzalez Rogers will address all claims brought under that law, plus the four states’ allegations that the company violated ​their state laws protecting consumers by misleading them about the safety of their platforms.

Meta has denied the allegations, saying the attorneys general have no evidence it ‌misled consumers ⁠about its platforms' alleged addictiveness because "social media addiction" is not an established psychiatric condition, and therefore statements that its platforms were not addictive could not be false.

A further 14 states have brought claims under their own laws, which will be heard at a separate trial in February.

Last month, Rogers rejected Meta’s bid to cancel the trial, saying there remained factual disputes over whether its social media platforms were addictive, whether Meta falsely denied it ​designed them that way, and whether ​it "partially" directed the platforms at ⁠children.

California Attorney General Rob Bonta said after Rogers' ruling that Meta was putting profits ahead of children's safety and breaking consumer protection laws, promising to hold the company "fully accountable" for its role in the teen mental health ​crisis.

Meta, Snapchat and parent Snap Inc. (SNAP.N), opens new tab, YouTube and parent Alphabet Inc. (GOOGL.O), opens new tab, and TikTok and parent ByteDance are ​facing thousands of lawsuits ⁠in both federal and state court over claims they knowingly designed their platforms to have features that addict children and teens, fueling a mental health crisis.

States across the country have sued the companies, some as part of the case before Rogers and others in their home state courts. New Mexico ⁠was the ​first to go to trial, and a jury awarded the state $375 million in March ​after finding the company had misled New Mexico consumers.

A judge in New Mexico is currently weighing the second portion of the state’s case, which seeks additional damages and a court order ​directing the company to make changes to its Instagram, Facebook and WhatsApp platforms.

Reporting by Diana Novak Jones; Editing by Alexia Garamfalvi and Kate Mayberry

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Diana Novak Jones

Thomson Reuters

Diana reports on product liability, litigation, mass torts and the plaintiffs' bar. She previously worked at Law360 and the Chicago Sun-Times.

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