Meta to pay $25 billion in New Mexico data ruling

A New Mexico judge ordered Meta to pay $25 billion on Thursday for violating state consumer protection laws. This marks the largest financial penalty the social media company has ever faced in a court of law.

The legal dispute began in 2021 when the state sued Meta under the Unfair Practices Act. Prosecutors argued that the company misled users about how it handled their personal data, a practice rooted in the Cambridge Analytica scandal. The attorney general later expanded the case to include claims regarding content moderation. A jury sided with the state in September, leading to the multibillion dollar judgment.

Meta has publicly stated that it will contest the outcome. C.J. Mahoney, the company's chief legal officer, characterized the ruling as an attempt to impose a tax on speech. He argued that the enforcement approach makes it all but impossible to do business in the state and expressed confidence that the company will prevail on appeal.

This judgment adds to a string of legal setbacks for Meta this year. Earlier in the year, a jury ordered the company to pay $375 million in a separate trial concerning child safety. A second phase of that same case resulted in an additional $567 million order. In a Los Angeles County superior court, Meta and YouTube were found liable for harming a young woman's mental health through addictive app design, with Meta covering most of the $6 million award. Additionally, 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 the size of the fine, the amount is small relative to Meta's overall financial position. The state originally requested a penalty between $35 billion and $45 billion. The maximum possible fine was calculated at $219 billion, based on $5,000 for each of 43 million alleged violations. Judge Francis Mathew reduced this figure to $25 billion. With the company currently valued at approximately $1.7 trillion, the fine represents a small percentage of its total worth. Meta's stock fell on Thursday, a drop that reflected earnings results and heavy spending on artificial intelligence.

Legal experts suggest that financial penalties alone may not force immediate operational changes. Corban Rhodes, a partner at DiCello Levitt, which represents New Mexico, noted that trial evidence becomes public record when a case is not settled. The New Mexico trial placed more than 100 exhibits on the public record, including materials kept secret for over a decade. One such exhibit was a 2018 email from then-COO Sheryl Sandberg, who warned of many more moments like Cambridge Analytica in the coming months.

Pressure may also come from insurers and shareholders. A Delaware judge ruled in March that insurers have no duty to defend Meta against thousands of lawsuits. Some experts argue insurers could require responsible design as a condition of coverage. Brian Quinn, a law professor at Boston College, said that if shareholders focus on individual directors rather than the company as a whole, they might demand that the company stop indemnifying executives who repeatedly appear in litigation.

Meta is not expected to collapse from these penalties alone. Rhodes expects the next wave of litigation to center on artificial intelligence, as regulators and courts shift their focus from the effects of earlier social media eras to newer technologies.