Meta Platforms will pay up to $18 billion over the next decade under sweeping settlements with nearly all US states.
The agreements resolve claims that Meta designed Facebook and Instagram to addict children and misled the public about platform safety.
The deal also forces major changes to how teenagers use both platforms. It ends a closely watched federal trial that began in Oakland, California, on August 18.
California, Colorado, Kentucky and New Jersey had prepared to seek close to $200 billion in civil penalties, according to Reuters.
Meta denied wrongdoing as part of the settlement.
“The focus of this case was to protect our kids,” Colorado Attorney General Phil Weiser said in a statement. “The relief we are getting in this settlement is very meaningful and well beyond what any court has ordered or is likely to order.”
The agreement could also become a model for thousands of other lawsuits against social media companies.
Governments worldwide are tightening rules for young social media users. Australia, for example, has moved to ban social media access for children under 16.
Facebook and Instagram Get Two-Hour Limit for Teens
Meta will impose a default two-hour daily limit on Facebook and Instagram for users under 18.
The limit applies across both platforms rather than separately to each app. Parents can provide permission to change the restriction.
Meta will also block most use between midnight and 6am by default.
During school hours, from 8am to 3pm, teenagers will not receive most push notifications. Direct messages and certain safety alerts will remain exempt.
Meta will also show teenagers prompts after every 15 minutes of continuous use.
The company has agreed to strengthen age-assurance technology. It will try to identify under-18 users even when they provide an adult birthday.
Meta will also step up efforts to find accounts belonging to children under 13.
The company must maintain stricter content settings for teenagers. It will also strengthen parental controls and protections against unwanted contact from suspicious adults.
The restrictions could become tougher if Snapchat, TikTok and YouTube adopt comparable protections.
Under that second stage, daily limits could fall to one hour per platform. Night restrictions could also expand from 10pm until 7am.
However, the settlement does not force Meta to abandon personalized recommendations or targeted advertising.
It also leaves some controversial content issues outside the agreement. These include posts that Meta researchers previously linked to body-image concerns among Instagram users.
Meta said teen safety remains a priority.
“Ensuring teens have a safe and productive experience on our platforms is an absolute imperative for Meta,” the company said. “We want to get this right for parents and teens.”
Meta has also urged TikTok and YouTube to adopt the same protections.
The company plans to push for wider industry action because teenagers often move between multiple social media platforms.
Meta Faces Billions in Payments
Reuters reported that Meta agreed to maximum payments of about $16.7 billion to 47 states, Washington, D.C., Puerto Rico, American Samoa and the Northern Mariana Islands.
Texas reached a separate child-safety settlement worth more than $1 billion. The Texas attorney general confirmed the payment on Wednesday.
California could receive about $2.2 billion, while New York could receive around $1.1 billion.
Some states plan to direct parts of the money toward children’s mental health services. Others may place proceeds into general state accounts.
The main settlement includes about $12.7 billion in guaranteed payments over a decade.
Another $5 billion depends on whether Snapchat, TikTok and YouTube adopt similar protections and reach comparable agreements with states.
“This is a big deal,” Northwestern University law professor James Speta said.
“Meta and other companies were facing pressure to change business practices whether or not they lost the lawsuits, from the public and from Congress and state legislatures,” he said.
“These restrictions will change the experience on Instagram and Facebook, and they are designed to reduce engagement.”
Meta also agreed to pay $459 million to resolve separate privacy claims connected with the Cambridge Analytica scandal.
The British consulting firm obtained personal information from millions of Facebook users without authorization.
California, Illinois, New Mexico and Washington, D.C., brought those privacy claims.
US District Judge Yvonne Gonzalez Rogers approved the main settlement late Wednesday.
She had overseen the federal trial in Oakland.
The judge called the agreement “a good step forward.”
“I am quite happy to not have to finish up this trial,” she told lawyers for Meta and the states.
Instagram chief Adam Mosseri had started testifying before the parties announced the settlement.
Meta CEO Mark Zuckerberg had also been expected to testify.
Meta shares rose as much as 4.1% during Wednesday’s trading. They closed the session up about 1.1%.
Thousands of Social Media Lawsuits Remain
The settlement does not end Meta’s wider legal problems over child and teen safety.
Meta and other social media companies still face thousands of lawsuits in federal and state courts.
Individuals, school districts, municipalities and government bodies accuse the companies of deliberately designing addictive products.
The lawsuits link excessive social media use to anxiety, depression, suicide and other mental health problems among young people.
Judge Gonzalez Rogers oversees many of those federal cases.
The Meta trial included state consumer-protection claims from California, Colorado, Kentucky and New Jersey.
Twenty-nine states also accused Meta of violating the federal Children’s Online Privacy Protection Act.
They alleged that Meta knowingly collected children’s personal information without parental consent. They also accused it of using that data to train machine-learning and generative AI systems.
Meta has argued that it could not mislead users about “social media addiction” because the term is not a recognized psychiatric condition.
The settlement follows several recent legal setbacks for the company.
Earlier in August, a New Mexico judge ordered Meta to pay $567 million and implement youth-safety measures.
That came after a jury ordered another $375 million payment in the same New Mexico case in March.
The combined penalties reached $942 million. Meta has said it will appeal.
Also in March, a Los Angeles jury found Meta and Google’s parent Alphabet negligent in designing their platforms.
The jury awarded $6 million to a 20-year-old woman. She said she became addicted to Instagram and YouTube as a child.
Both companies said they would appeal.
The European Union has also increased pressure on Meta.
In July, the European Commission warned the company that some Facebook and Instagram features could violate EU rules governing harmful online content.
New Mexico did not join Wednesday’s nationwide settlement.
Attorney General Raul Torrez said the agreement did not include every protection achieved in his state’s litigation. However, he said it “represents real progress and adds momentum to finish the job of protecting kids online.”
Florida also declined to settle and plans to continue its case.
“The payouts to the states are peanuts compared to the profound harms Meta’s profit-driven addictive features have inflicted on our children,” Florida Attorney General James Uthmeier said. “We’ll see them at trial.”
The settlement nevertheless represents one of the biggest attempts yet to change how a major social media company serves young users.
It could also increase pressure on TikTok, Snapchat and YouTube to accept similar limits for teenagers.
