Meta Platforms has agreed to pay up to $16.7 billion to settle lawsuits alleging its Instagram and Facebook platforms were deliberately designed to addict young users.
The settlement, announced on Wednesday, could increase to $18 billion if other major technology companies join the agreement. Following the announcement, shares in Meta rose 2.3 percent during morning trading.
As part of the agreement, Meta committed to implementing strict usage restrictions across both social networks. Teenagers will be limited to two hours of daily use on Facebook and Instagram, with access blocked between midnight and 6:00 a.m. unless parents grant explicit permission.
The company will also disable most push notifications for teenage accounts during school hours, from 8:00 a.m. to 3:00 p.m., while tightening measures to prevent children from accessing age-restricted content. However, the agreement does not require Meta to stop using targeted advertising or personalized recommendation algorithms.
New rules for teenage social media use
The terms governing daily time limits and night-time lockouts could become even stricter if competing platforms, including TikTok, Snapchat and YouTube, adopt similar restrictions.
The deal resolves legal actions brought by prosecutors across 29 states in the United States. The state officials accused Meta of designing features that intentionally hooked young users, contributing to youth anxiety, depression and suicide, while misleading the public about platform safety.
All 29 states also alleged that Meta violated federal law by illegally collecting and misusing personal data from children under 13 years old. Prior to the settlement, state prosecutors indicated they could seek civil penalties approaching $200 billion.
Internal documents and court testimony
Internal company documents and testimony from former employees revealed that Meta executives were aware of internal concerns about teenage mental health and addiction but chose to continue deploying platform features.
Adam Mosseri, who has served as the head of Instagram since 2018, testified in court on Tuesday, where he denied all allegations of wrongdoing against the company.
His appearance followed testimony from Instagram product design director Francesco Fogu regarding a 2023 presentation on teenage safety prepared for senior leadership. Questioned by an attorney, Fogu admitted deleting data from a presentation slide showing that teenage Instagram users encountered 1.5 times more content related to bullying, suicide, hate speech, nudity and violence than adult users.
Meta defense and Cambridge Analytica claims
Meta denied all allegations of wrongdoing throughout the proceedings. The company rejected claims that it attempted to addict children for financial gain, stating that its internal research showed no clear link between teenage social media use and harm to well-being.
The company further argued in court that it could not have deceived consumers over whether its services were addictive, maintaining that social media addiction is not an officially recognized psychiatric condition.
In addition to settling the youth addiction claims, the agreement resolves separate privacy lawsuits filed in California, Illinois, New Mexico and Washington, D.C. Those cases stemmed from the Cambridge Analytica data scandal that emerged in 2018, when Facebook was accused of allowing the unauthorized collection of personal data from millions of users.
Under the terms of the settlement, the four states and federal district will receive $459.3 million. Meta Platforms, based in Menlo Park, California, operates Facebook and Instagram, which rank among the most widely used digital communication platforms globally.
