Meta Platforms (NASDAQ:META) and attorneys general representing several U.S. states have held discussions about potentially settling a lawsuit accusing the technology company of designing Facebook and Instagram in ways that encourage addictive behaviour among teenagers, Bloomberg News reported on Wednesday, citing people familiar with the matter.
The discussions have emerged during the second week of a federal trial in Oakland, California. A group of 29 states is seeking financial penalties as well as changes to the way Meta operates its social media platforms.
Meta disputes allegations and proposed remedies
Meta has rejected the allegations brought by the states and argued that the proposed changes to its platform design, along with the potential financial penalties, are unreasonable.
California, Colorado, Kentucky and New Jersey are leading the case. The states allege that Meta knowingly created features intended to encourage young users to spend prolonged periods on Facebook and Instagram while providing consumers with misleading information about its safety measures.
The lawsuit forms part of broader scrutiny surrounding the effects of social media platforms on younger users and the measures technology companies use to address potential harms.
Potential penalties could reach $1.4 trillion
According to Bloomberg, Meta has estimated that an unsuccessful outcome in the case could expose the company to penalties of as much as $1.4 trillion.
Any negotiated settlement would likely be substantially smaller than that potential figure, although no agreement has been announced and the discussions may not necessarily result in a deal.
The scale of the possible penalties increases the significance of the trial for Meta and its shareholders, particularly if the case ultimately results in operational changes affecting Facebook and Instagram.
Zuckerberg expected to testify as trial continues
The trial has already included testimony from Instagram head Adam Mosseri, along with current and former Meta employees.
Meta chief executive Mark Zuckerberg is also expected to testify as proceedings continue, according to Bloomberg.
The outcome could have implications beyond financial penalties, particularly if Meta is required to modify features or other aspects of its platforms relating to teenage users.
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