Meta fell by about 4.5 per cent on Tuesday and reported $543.67. The focus of market attention is not just on the amount of compensation, but also on the case surrounding the safety of Instagram children, which may force companies to adjust their core product design, thus affecting platform growth and user activity.
Co-prosecution of Meta by 29 states.
The case was jointly promoted by 29 states of the United States and is currently being tried in Auckland, California. California, Colorado, Kentucky and New Jersey were the main lead parties, and the case was heard by Yvonne Gonzalez Rogers, United States District Judge.
The Länder have accused Meta of intentionally using products that enhance child and adolescent viscerality while misleading users about the associated risks. Meta denies these allegations and states that the company has invested resources on a continuous basis to strengthen protection measures for young users.
The scale of the fine is large.
The $1.4 trillion referred to outside is not a fixed amount of compensation that has been formally claimed by the cantons. According to Meta, this figure represents the theoretical maximum amount of fines calculated by companies on their own initiative, based on the interpretation of consumer protection laws by the cantons.
Meta claims that this amount is too high and lacks precedent. The state attorneys-general involved in the case indicated that the actual fine might be closer to $20 billion. The trial is expected to last about six weeks, and Chief Executive Officers Zuckerberg and Instagram, Adam Mosseri, are expected to testify.
Increased focus on platform functional adjustments
For investors, the greater risk in this case may not be a one-time fine, but whether the court requested Meta to modify the design of the products of Facebook and Instagram.
The directions sought by the Länder include limiting or removing the infinity of rolling, popping, etc.; strengthening age control; and tightening the way minors interact with the platform. If the court supports the request, the impact may extend to the length of the user ' s stay, the distribution of the content and the ability to make an advertisement.
Previously, Meta had experienced similar legal setbacks in New Mexico. The jury initially awarded a civil fine of $375 million in March this year, followed by an additional $567 million in the Juvenile Mental Health Fund, with a potential total of approximately $942 million. Meta filed an appeal.
The impact of this Auckland case may be broader, as the focus of the dispute is not only on individual harmful content but rather on whether the overall design of the platform poses a systemic risk to minors. The design of services by other social media companies for young users may also be influenced once the court requests a major product adjustment.