Meta faces $25 billion bill from New Mexico court

A New Mexico judge ordered Meta to pay $25 billion this week for violating state consumer protection laws. The ruling marks the largest fine the company has ever faced. Legal analysts are now debating whether the amount is large enough to alter the company's behavior or if it is merely a manageable cost of doing business.

The state filed the case in 2021, alleging Meta misled users about data handling practices following the Cambridge Analytica scandal. The attorney general later added claims regarding content moderation policies. A jury sided with the state in September. The judge then calculated the penalty based on 43 million violations. The theoretical maximum penalty was $219 billion, or $5,000 per violation. Judge Francis Mathew reduced the final amount to $25 billion. New Mexico attorneys originally requested between $35 billion and $45 billion.

Meta plans to appeal the decision. C.J. Mahoney, the company's chief legal officer, called the ruling an attempt to impose a tax on speech. He stated that the enforcement approach makes it all but impossible to do business in the state. Mahoney expressed confidence that the company will prevail on appeal.

This penalty adds to a series of financial setbacks for Meta this year. A separate New Mexico jury ordered the company to pay $375 million for child safety violations, followed by a second phase that resulted in a $567 million order. In Los Angeles, a court ordered Meta to pay most of a $6 million award to a young woman who claimed addictive app design harmed her mental health. In August, Meta agreed to pay between $17 billion and $18 billion over ten years to settle a federal case brought by most US states over features alleged to harm children.

Despite these sums, the fines remain small relative to the company's valuation. Meta is currently valued at approximately $1.7 trillion. The company's shares fell on Thursday, but the drop reflected a mix of factors, including its earnings report and heavy spending on artificial intelligence. Corban Rhodes, a partner at DiCello Levitt, which represents New Mexico, noted that the trial placed more than 100 exhibits on the public record. These materials had been kept secret for over a decade.

One exhibit is a 2018 email from then-COO Sheryl Sandberg. Written days after the Cambridge Analytica scandal broke, the email warned that there were a million developers with access to the data. Sandberg predicted many more moments like this in the following year. Legal experts suggest that pressure may come from other areas. A Delaware judge ruled in March that insurers have no duty to defend Meta against thousands of lawsuits. Some argue insurers may require responsible design as a condition for coverage. Brian Quinn, a law professor at Boston College, said shareholders may focus on individual directors. If the same people keep appearing in the same facts, shareholders might demand that the company stop indemnifying them.

Meta's legal troubles are expected to continue. Rhodes said regulators have focused on the effects of earlier social media eras. He expects the next wave of litigation to center on artificial intelligence.