Legal trouble as Meta to cough up $25 bn for deceiving users on privacy

ELI TAN AND CECILIA KANG

SAN FRANCISCO: A New Mexico judge on Wednesday ordered Meta to pay $25 billion for deceiving users about its data privacy practices, one of the largest penalties levied against a tech giant.

New Mexico sued Meta in 2021 over a scandal involving political consulting firm Cambridge Analytica, saying the social media company had misled users with its public statements about their data privacy. Last month, after a two-week trial, a jury in state District Court in Santa Fe ruled against Meta, saying the company had committed 43 million violations of New Mexico’s consumer protection laws. Each violation carried a penalty of up to $5,000. On Wednesday, Judge Francis J Mathew of the Santa Fe court issued the landmark penalty, writing that the company and its executives purposefully misled the public.

“The harm in this matter is difficult to overstate, and goes to the heart of Facebook’s basic business proposition,” Mathew wrote in a 20-page judgment. He said the “extraordinary number of willful violations” that repeated over years “support the highest level of penalty.” The order is the biggest blow yet to Meta, which owns Facebook, Instagram and WhatsApp, as it has racked up court losses over the harms that its social media platforms have caused users. States and consumers have filed thousands of lawsuits over issues such as how Facebook and Instagram endangered child safety, led to social media addiction, used people’s data without their consent and infringed on their privacy.

New Mexico has been leading the charge against Meta, and winning. In August, a New Mexico judge ordered the company to pay $567 million in damages after a jury ruled the company had enabled harm to young users, on top of a $375 million penalty from the same case in March.

In both cases, New Mexico accused Meta of violating state consumer protection laws, which have emerged as an effective way to litigate against tech companies that have been previously shielded by laws that protect free speech, said Vincent Joralemon, director of the Life Sciences Law and Policy Center at the Berkeley Center for Law and Technology.

“The takeaway from this will be that consumer protection laws will be the way to hold tech companies accountable,” Joralemon said, adding that the penalty could inspire other states to pursue similar lawsuits.

In August, Meta reached a landmark settlement with 47 states, the District of Columbia and US territories, agreeing to pay up to $17.1 billion in penalties and make major changes to its products over claims that it endangered children with addictive social media platforms. As part of that settlement, Meta agreed to pay $459 million to settle similar privacy claims regarding Cambridge Analytica, meaning other states are unlikely to pursue the charges that New Mexico did.

New Mexico will apply the $25 billion awarded Wednesday toward a public education fund, according to the state.

“For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law,” Raúl Torrez, the attorney general of New Mexico, said in a statement. “Today’s result makes clear that no corporation is too powerful to be held accountable.”

Meta said it would appeal the decision.

“At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online,” CJ Mahoney, Meta’s chief legal officer, said in a statement. “We are confident we will prevail on appeal.”

Some legal experts said the penalty could be the largest for any corporation from a jury verdict.

“It is a shockingly big number that jumps off the page,” said Darrell West, a senior fellow at the Brookings Institution, a think tank in Washington. “In the absence of congressional action, juries are stepping up to the plate.”