The trial against Meta, the parent company of Facebook and Instagram, began on Tuesday in Oakland, California, with 29 US states seeking $200bn in damages. The states allege that Meta designed its platforms to be addictive, deliberately targeting children, according to court documents.
Background and Legal Precedents
The case draws parallels to the 1994 lawsuit against big tobacco, where over 40 states sued tobacco companies for misleading advertising and public health harm. That case ended in a negotiated settlement, with companies paying more than any industry ever. Thirty years later, the global tobacco market is worth nearly $1tn.
This trial follows a bellwether case earlier this year, where a Los Angeles jury found Meta and YouTube liable for deliberately designing an addictive product that harmed a young claimant's mental health, awarding $6m. That verdict opened the door for this litigation. Additionally, Meta paid $942m in a separate New Mexico case focused on child sexual exploitation on its platforms.
The Core of the Lawsuit
The current litigation focuses less on child exploitation and more on Meta's fundamental platform design, specifically the algorithm that ranks content in users' feeds. The attorneys general argue this "dopamine-manipulating" feature fuels engagement by showing emotionally charged posts, making the platform addictive.
Kate Winick, an analyst at Forrester, said the trial was "potentially the end of social media as we know it," and while a ruling against Meta might not permanently kill the industry, it could "significantly reduce usage over the long term."
Potential Financial and Operational Impact
The states are seeking $200bn in damages, equivalent to Meta's annual revenue. Meta has argued in court filings that damages could reach $1.4tn, nearly its market capitalisation, but the judge called that estimate "unreasonable."
A more realistic risk is permanent changes to how Meta's social networks operate. Meta is primarily a digital advertising company, and its recommender algorithm drives engagement. Steven Murdoch, a professor at University College London, noted that changes to the algorithm might not alter advertising directly but could reduce engagement, hurting ad opportunities.
Global discontent is growing; the EU also wants Meta to modify its "addictive design." Murdoch said there is "a plausible path" for global algorithm changes, but added, "I'm not convinced the things that are plausibly going to be asked for are going to be devastating for the company."
Precedents suggest limited impact. In 2023, US regulators sued Google for antitrust violations, but despite losing, Google avoided breaking up, facing only a "slap on the wrist" per critics. Murdoch said, "I don't think anyone really wants to destroy Facebook. It's a valuable company and there would be so many bad outcomes."
A Meta spokesperson said: "The state AGs may call this a landmark case but their limited claims are unsubstantiated and their financial demands are vastly disproportionate. Rather than sticking to the facts or the law, the states have instead decided to chase an outlandish payout. We stand by our record of creating strong protections for teens, and look forward to making our case in court."
Comparison with Big Tobacco
In a landmark tobacco case, the US government sought $289bn from major companies, but the amount was reduced to $14bn over 10 years. Philip Morris continued business, though forced to change marketing. Thirty years later, Philip Morris's revenues are around $40bn annually, steadily increasing over the past four years.
The trial's outcome will determine whether Meta faces similar long-term consequences, potentially reshaping social media regulation worldwide.
