Meta ordered by judge to pay $25 billion penalty

A New Mexico state court judge ordered Meta to pay a $25 billion penalty on Wednesday after a jury found the tech giant liable for systematically deceiving users about privacy on Facebook. The ruling marks the largest financial penalty ever levied against the company, surpassing its previous regulatory hurdles by tens of billions of dollars.

Judge Mathew Rules Meta Misled Users For Over A Decade

State District Court Judge Francis J Mathew issued the ruling following a jury trial that examined years of platform practices. According to the court’s findings, the company’s conduct was intentional, and corporate leaders consistently misled the public about how user data was managed. Facebook promised users that they (the users) controlled their data. This was false, Judge Mathew wrote in his decision, as reported by nine.com.au.

The judge calculated that a potential penalty under state law could have exceeded $219 billion based on thousands of individual violations. However, he ultimately reduced the sum to the $25 billion figure. The legal battle stems from a 2021 lawsuit filed by New Mexico Attorney General Raúl Torrez over the Cambridge Analytica data harvest, which improperly obtained information from up to 87 million profiles for targeted political ads during the 2016 US presidential election.

New Mexico Rejects Multi-State Settlement To Pursue Trial

While 48 other states and territories agreed to an $18 billion settlement with Meta in August to resolve child-safety and teen social media addiction claims, New Mexico and Florida chose not to sign. By going it alone, New Mexico brought the Cambridge Analytica privacy case to trial, securing a verdict where jurors found Meta liable for over 43 million violations of state consumer protection laws.

During the court proceedings, state attorneys argued that the deception affected the entire population of New Mexico rather than just active platform users. Randi McGinn, a lawyer for New Mexico, had asked the court to award the state between $35bn and $40bn, stating, This court should speak to Meta in the only language it understands, which is money, and the value of its stock price, as noted by The Guardian.

Meta Plans Appeal As Stock Trades Higher Despite Penalty

Meta representatives indicated plans to appeal the verdict, arguing that the state failed to prove actual consumer harm or establish that residents had seen the contested privacy statements. During an October 1 hearing, defense attorney Matt Nicholson argued that the state’s demands were unconstitutional, stating, The jury didn’t make findings that any New Mexican heard or saw these statements, or was harmed by them, according to nine.com.au. Defense counsel also maintained that a sum approaching $40 billion would be shocking to the conscience and violate due process.

Despite the historic penalty—which dwarfs the $5 billion fine levied by the Federal Trade Commission in 2019—Meta shares traded 2 per cent higher as the company prepared to report its quarterly earnings. Under the New Mexico Constitution, the funds recovered from consumer protection violations are designated for state education spending, though the money will remain tied up while the appeals process unfolds.