Earlier this week, a New Mexico judge ordered Meta to pay a $25 billion fine for violating consumer protection laws dating back to the Cambridge Analytica scandal. $25 billion is a massive fine, the largest Meta has ever faced, but it still had us folks at WIRED wondering: Would Meta even feel the pain?
A quick recap of the case: Filed in 2021, the suit alleged that the company violated the state’s Unfair Practices Act by lying to Meta users about the way it handled their data. (Later, New Mexico’s attorney general also made claims against Meta’s content moderation policies.) In September, a jury ruled in favor of the state. Then came the multibillion-dollar penalty.
“This ruling, and the Attorney General's approach to enforcement, makes it all but impossible to do business in the state of New Mexico,” C.J. Mahoney, Meta’s chief legal officer, said in a statement. “At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online. We are confident we will prevail on appeal.”
Meta’s legal troubles have proliferated so much this year that it’s hard to keep track of them. Earlier this year in New Mexico, a jury ruled that the social media company should pay $375 million for violating the state’s Unfair Practices Act. That trial was related to child safety. A second phase of the case resulted in Meta being ordered to pay $567 million.
Meanwhile, a Los Angeles County superior court found Meta—and Google-owned YouTube—liable for harming a user’s mental health with the addictive design features of their apps. The plaintiff, a young woman, was awarded $6 million; Meta is on the hook for the bulk of that payment. Then in August, Meta settled a landmark federal case brought against the company by the majority of US states. This suit, once again, centered on addictive features in its apps that were alleged to be harmful to kids. As part of that settlement, Meta will pay the states between $17 and $18 billion over 10 years.
Added up, that’s a lot of billions. And yet: It’s still just the cost of doing business for Meta. Reuters reports that in the most recent New Mexico trial, the state’s attorneys originally asked Judge Francis Mathew to award the state between $35 and $45 billion. That would’ve been significant for the state, but would that extra $20 billion have kneecapped Meta? Nope.
Even if Meta was forced to pay the total maximum fine of the New Mexico ruling—a whopping $219 billion, or $5,000 across 43 million violations, reduced by the judge to $25 billion—the company would have felt only a mild sting. As of writing, Meta is worth around $1.7 trillion. Its stock took a hit on Thursday, but that was due to a confluence of factors, like Meta’s earnings report on Wednesday, the company’s massive capital expenditures on AI, and AI stocks dragging overall.
At this point, with no immediate monetary damage to Meta, it would take an accumulation of events to force some kind of change, legal experts tell me. For one, Meta has a clear perception problem: Juries are ruling against it, protesters have railed against it, even its own employees have been more vocal about the company’s internal policies.
Every time Meta doesn’t settle a case, the evidence presented during trial can be scrutinized by the public and used in future cases against Meta, says Corban Rhodes, partner at DiCello Levitt, the outside law firm representing New Mexico in this case. “This trial included more than 100 exhibits that we were able to put into public record, things that had been kept secret for more than a decade since Cambridge Analytica,” Rhodes told WIRED.
One such item is a 2018 email that then COO Sheryl Sandberg sent to a few colleagues days after the Cambridge Analytica scandal broke. Sandberg wrote, “The single biggest issue we face—and I really need everyone to know this—is that there were a MILLION developers with access to the data. We are going to have many, many, many more moments like this in the next month and year.”
There are early signals that private insurers may start balking at having to cover the cost of a tech company’s legal defenses. Some experts are suggesting that insurance companies could even end up being de facto governance for AI, as they “inject responsibility into how AI is designed, developed, and deployed as a condition for obtaining insurance.” Meta learned this firsthand in March, when a Delaware judge ruled that insurers do not have a duty to defend Meta against the literal thousands of lawsuits being brought against it.
There’s no well-defined number at which Meta suddenly becomes vulnerable—the company is unlikely to ever fold from legal penalties alone. But problems could crop up if shareholders or board members stop seeing the company as some inanimate entity and start to focus on the individual directors or officers who have been making bad decisions, says Brian Quinn, a law professor at Boston College Law School who studies corporate law, M&A, and transaction law. Like, say, the people who keep appearing in lawsuits.
“The way that indemnification law is written right now, the fact that a person in a company was found to have violated a law doesn’t necessarily make them liable. It can be believed that they were acting in good faith, or in the best interest of their company,” Quinn says. “But problems start to arise if shareholders say, wait a minute, there’s not only evidence that this director or operator is violating the law, but it has appeared in the same set of facts seven times now.”
After a huge accumulation of these kinds of results, Quinn says, some angry shareholders might stand up and say the corporation should no longer be able to indemnify those directors. That’s when you might see change, because Meta’s executives would no longer be as protected.
Finally, since litigation is often behind the curve on society-disrupting technology, Meta’s legal woes are likely far from over—especially as it wades deeper into AI. “Regulators and courts have for a long time been focused on the impact of social media 1.0 and 2.0, and I think we’re moving on from that era,” says Rhodes. “I expect the next wave of litigation will be focused on AI.”
This is an edition of Steven Levy’s and Lauren Goode's Backchannel newsletter. Read previous newsletters here.