While the New Mexico jury's landmark decision to hold Meta liable could be a bellwether, the penalty is only a fraction of what prosecutors sought.
A New Mexico jury on Tuesday found Meta Platforms liable in a child safety lawsuit, saying it knowingly harmed children's mental health and concealed its knowledge of child sexual exploitation on its social media platforms.
Meta owns several social media platforms including Facebook, Whatsapp, Instagram and Threads.
The landmark decision comes after nearly a seven-week trial, brought to court by the state attorney general.
After deliberating for less than a day, the jury found Meta guilty of violating New Mexico's consumer protection law and ordered the tech giant to pay $375 million (roughly €323 million) in civil penalties.
This is the first time a jury has ruled against Meta on child exploitation claims. Meanwhile, another jury in a California federal court has been sequestered in deliberations for over a week over whether Meta and YouTube should be liable in a similar case.
What did the jury find about Meta's practices?
Jurors agreed with New Mexico state prosecutor that Meta made false or misleading statements about child safety on its platforms.
They also agreed that Meta engaged in "unconscionable" trade practices which unfairly took advantage of children's vulnerability and inexperience.
The jury found there were thousands of violations, each stacking up toward the $375 million fine.
In a statement, New Mexico Attorney General Raúl Torrez called the verdict "a historic victory for every child and family who has paid the price for Meta's choice to put profits over kids' safety."
"The substantial damages the jury ordered Meta to pay should send a clear message to big tech executives that no company is beyond the reach of the law," he said.
How did Meta react to the jury's decision?
A Meta spokesperson said the company disagrees with the New Mexico verdict and will appeal.
“We work hard to keep people safe on our platforms and are clear about the challenges of identifying and removing bad actors or harmful content,” the spokesperson said.
"We will continue to defend ourselves vigorously, and we remain confident in our record of protecting teens online.”
Will the penalty make a difference?
While the verdict is a significant precedent, the $375 million fine is a fraction of the $2.2 billion penalty prosecutors were seeking.
One juror, Linda Payton, said the jury reached a compromise on the estimated number of teenagers affected by Meta's platforms while opting for the maximum penalty per violation, that is $5000.
Meta is currently valued at about $1.5 trillion. Its stock was up in the hours after the verdict, signalling shareholders' apathy toward the penalty.
The second phase of the trial will begin in May where a judge, not a jury, will determine whether Meta's social media platforms should pay for public programs to address the harm.
Torrez said his office will ask the court to force Meta to make changes and impose additional financial penalties in the second phase.
Meta is also facing thousands of lawsuits accusing it and other social media companies of intentionally designing their products to be addictive to young people, leading to a nationwide mental health crisis.
Some of these lawsuits seek damages in the tens of billions of dollars, according to Meta's filings with financial regulators.
At the same time, several countries already have or are considering banning social media for children.
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