Meta ordered to pay state $25bn for deceiving users about privacy

A judge has ordered Meta to pay New Mexico 25 billion dollars (£18.6 billion) after a jury found the company liable for deceiving users about privacy and content moderation policies on Facebook.

Judge Francis Mathew handed down the amount, which state attorney general Raul Torrez described as “one of the largest, if not the single largest state verdict against a company in American history”.

Mr Torrez said the verdict should be a warning for tech companies and that New Mexico would continue to hold them accountable.

“This judgment should be a signal, an unambiguous message, to Silicon Valley,” Mr Torrez said at a news conference.

The state had sought 35 billion dollars to 40 billion dollars (£26 billion to £30 billion).

Jurors in September found Meta liable for more than 43 million violations of New Mexico consumer protection laws when a political consulting firm, Cambridge Analytica, harvested Facebook user data to generate targeted political ads for the 2016 election.

Forty-eight other states settled with Facebook in a nationwide case, but New Mexico chose to take the social media company to court on its own.

Lawyers for New Mexico sought what could have been the largest judgment in US history, arguing the company would only change its ways with a sum that affected its stock price.

Lawyers for Meta argued for paying no more than 3.4 billion dollars (£2.5 billion). An award 10 times that or even more would violate due process, was unconstitutional and would not hold up under appeal, they said.

Mr Torrez has said they money will go into a state fund for education.

Meta argued the state failed to prove misleading statements about privacy and that content moderation actually harmed New Mexicans. Interest on the penalty would accrue during an appeal, but the number of violations Meta is charged with could be reduced.

Meta lawyer Matt Nicholson argued in court that a sum as high as 40 billion dollars would be “shocking to the conscience” while a lawyer for New Mexico, Randi McGinn, urged standing up to “tech titans who think they are bulletproof and can do whatever they want”.

The state’s case focused on accusations that Facebook deceived users about a data breach stemming from a third-party personality quiz that harvested data from roughly 87 million profiles and sold it to a political consulting firm, Cambridge Analytica, to generate targeted ads. The now-defunct firm’s clients included the 2016 campaign for President Donald Trump.

Lawyers for New Mexico argued that the state’s entire population, not just Facebook users, were deceived by the company’s public statements about privacy on the platform. Facebook’s lawyers argued that the state failed to prove whether people were actually harmed by these deceiving statements.

“The jury didn’t make findings that any New Mexican heard or saw these statements, or was harmed by them,” said Mr Nicholson during a hearing on October 1.

New Mexico prosecutors also argued that Facebook allowed misinformation or violent content to proliferate on the platform. Defence lawyers vehemently denied the allegations, saying the company’s content moderation policies are robust and freedom of speech has to be considered.

New Mexico was the only state to pursue a trial around the Cambridge Analytica scandal after 48 other states signed a settlement for 18 billion dollars (£13.4 billion) in August.

Besides New Mexico, Florida was the only other state that did not sign the settlement, which included an agreement to release Meta from future liability related to the Cambridge Analytica privacy breach.

During the trial, jurors assessed whether Facebook misled users about privacy and content moderation 34 separate times. State prosecutors, though, argued Facebook’s statements deceived the entire population of New Mexico and extended beyond social media users.

In the end, jurors agreed with this premise and found Facebook liable for 2.1 million violations on certain counts, bringing the total number of violations to more than 43 million.

Facebook’s lawyers have argued in subsequent court filings that the state’s consumer protection laws do not apply to people in New Mexico who were not using the platform at the time.

Mr Torrez told reporters following the verdict that all money awarded will go into a fund for the state’s education system. The state is also seeking an injunction to stop similar practices.

Meta plans to appeal against the jury’s verdict, potentially reducing the number of violations and therefor the total financial penalty.

Lawyers for the company said it was unprecedented for the state to count the number of violations based on how many individuals may have heard or seen the misleading statements from the company, arguing there was no evidence these statements ever harmed anyone.

During closing arguments, lawyers for Facebook said the state’s evidence was outdated and that despite having five years to gather material, New Mexico found only one other instance of a data breach.

In one of the few wins for the defence, jurors found the state did not prove that Facebook made false claims about removing harmful content, including misinformation about the Covid-19 pandemic.

The state said the company favoured certain accounts and allowed for violent or inaccurate content to proliferate.

Lwyer Randi McGinn said in her closing argument for the state that Facebook profited off harmful content, which chief executive Mark Zuckerberg denied during his video deposition.

Mr Zuckerberg said the company has to carefully balance freedom of speech with content moderation.

Lawyers for Facebook said the company has adapted its policies since the state’s lawsuit was filed in 2021 and that it removes 99% of content that violates standards.