Meta ordered to pay $25-billion penalty to New Mexico in data privacy case

'Facebook's wrongdoing — over the course of years and systematically broadcast to the public — goes to the heart of Facebook's core business practices,' Judge Francis Mathew writes in his order

A judge in New Mexico ordered Meta Platforms on Wednesday, October 21, to pay the state $25 billion after a jury found the company had misled consumers about the privacy of their data, hitting the company with one of the largest financial penalties in US history.

The ruling came in a case stemming from allegations that Cambridge Analytica, a British political consulting firm involved in Donald Trump’s 2016 presidential campaign, obtained data from millions of Facebook users without their consent. New Mexico had sued Meta, accusing it of lying to Facebook users in New Mexico about who had access to their data.

“Facebook’s wrongdoing — over the course of years and systematically broadcast to the public — goes to the heart of Facebook’s core business practices,” Judge Francis Mathew wrote in his order, which came more than three weeks after the verdict.

Mathew found that a penalty of more than $219 billion was warranted based on state law, but he reduced the figure to $25 billion.

In a statement, CJ Mahoney, Meta’s chief legal officer, said the company is confident it will win on appeal.

“This ruling, and the Attorney General’s approach to this enforcement, makes it all but impossible to do business in the state of New Mexico,” Mahoney said. “At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online.”

New Mexico Attorney General Raúl Torrez said in a statement after the ruling the penalty was one of the largest financial penalties against a corporation in US history.

Meta previously faced a $5-billion penalty from the US Federal Trade Commission in 2019 over the Cambridge Analytica scandal.

Six other states settled their lawsuits against Meta related to Cambridge Analytica for $459.2 million as part of a $17.1 billion multistate settlement the company reached in August to resolve states’ claims that the company’s platforms had harmed teen mental health.

Lawsuit filed 5 years ago

New Mexico’s attorney general sued Meta in 2021 following revelations that Cambridge Analytica had harvested personal data from as many as 87 million Facebook users through a third-party app.

The state accused Meta of lying to Facebook users in New Mexico about who had access to their data and its handling of hate speech and misinformation posted on the platform. It alleged the company knew third parties had broad access to users’ data and tolerated hate speech or other harmful content when it benefited the company’s bottom line.

Cambridge Analytica, now defunct, used the data for voter profiling and targeting.

“It has been a long time coming holding Big Tech accountable,” Torrez told a press conference in Albuquerque after Wednesday’s ruling. “I think today’s judgment is a clear break with that past and a very clear warning to those in this space and beyond that we intend to protect our people and protect our consumers.”

Mathew’s decision comes as Meta faces thousands of lawsuits and pressure from lawmakers over the impact of Instagram and Facebook on teen mental health, with another trial slated to begin next week.

Earlier this year, New Mexico won $942 million in a pair oftrials against Meta over claims it facilitated sexual exploitation of young people on Instagram and Facebook and misled consumers about the platforms’ safety.

Analyst Gil Luria, head of technology research at D.A. Davidson & Co, called the latest New Mexico ruling costly but unlikely to impact the company’s value.

“Meta is worth nearly two trillion dollars, and will likely continue to appeal these cases and drag them out,” Luria said.

Experts expect long legal fight

Jurors in September had found that the company and its leadership made 26 misleading statements on data privacy, hate speech and other subjects. Multiplying those statements by their potential audience, they said the company had committed more than 43 million violations of New Mexico’s consumer protection laws.

At a hearing on October 1, Randi McGinn, a lawyer for New Mexico, had asked Mathew to award the state between $35 billion and $40 billion.

“This court should speak to Meta in the only language it understands, which is money, and the value of its stock price,” McGinn said.

In court filings, Meta urged Mathew to cap the penalties at $3.45 billion. The evidence showed that Meta does not sell user data and New Mexico did not prove that any consumer had actually been misled, the company said in court filings. – Rappler.com

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