Meta Platforms and state attorneys general have discussed a possible mid-trial settlement of a blockbuster case accusing the company of deliberately designing Facebook and Instagram to addict teens, people familiar with the matter said. The trial, now in its second week in federal court in Oakland, California, poses an enormous risk for Meta as the top legal officers of 29 states are seeking both massive financial penalties on behalf of the public and mandatory changes to how the platforms operate.
The people familiar with settlement talks asked not to be identified due to their sensitivity. A spokesperson for Meta had no immediate comment, and a representative of the attorney general’s office in California declined to comment. Representatives of the other three states leading the case, Colorado, Kentucky and New Jersey, didn’t immediately respond to requests for comment.
The states have alleged violations of state consumer protection and federal privacy laws — which carry fines that add up quickly when multiplied by millions of young Instagram and Facebook users. Meta has denied the allegations and accused the attorneys general of seeking unreasonable design changes and an “outlandish payout.”
By its own calculations, a loss at trial could saddle the company with penalties of as much as US$1.4 trillion, an amount close to its market capitalisation and unheard of in the annals of legal history. A settlement would likely amount to a far smaller sum.
During the first week of testimony, jurors heard from Instagram head Adam Mosseri and a collection of current and former employees who helped design the social media platforms and study how teen users interact with tools meant to cut down on problematic use. Lawyers have said they also expect to call founder and chief executive officer Mark Zuckerberg to testify.
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The four attorneys general spearheading the case alleged under their separate state laws that Meta knowingly designed features that encouraged compulsive and prolonged use of its platforms by young people, while misleading consumers about safety features. The broader bipartisan group of 29 states accused the company of collecting data from users under 13 in violation of the federal Children’s Online Privacy Protection Act.
That distinction between state consumer claims and the federal privacy statute shapes what evidence the jury hears and what remedies the states can collect. A settlement before the verdict would let both sides avoid the uncertainty of a jury deciding how much blame sits with a single design decision versus a broader corporate culture.
Social media companies face a global backlash over concerns that they profit at the expense of young users, for whom a growing body of research shows excessive screen time is dangerously unhealthy. Authorities from Australia to Europe have enacted or proposed outright bans for youths in the last year, while legislative crackdowns in the US have had limited success, turning the courts into a key battleground.
Meta, Alphabet’s Google, Snap and TikTok all face billions of dollars in potential exposure from more than 3,000 personal injury claims by individuals and families in the US, and about 1,300 more lawsuits by public school districts across the nation.
Zuckerberg’s testimony is still ahead, and any deal would need approval from all 29 states, which have differing views on how aggressively to pursue the company. Some of the attorneys general have staked political reputations on the case, making a quiet resolution harder to sell to their constituents.