29 states join forces! Meta (META.US) is accused of "inducing addiction" and faces a risk of penalties up to $1.4 trillion.

Meta (META.US) will head to court on Tuesday for a high-stakes showdown against a coalition of state attorneys general. The plaintiffs allege that the company intentionally designed Facebook and Instagram to induce compulsive use (addiction) among teenage users. For one of the world's most valuable tech companies, this case carries significant risk. Attorneys general from 29 states not only seek hefty financial penalties but also hope to obtain a court injunction that would compel Meta to change the way it operates its platforms. The jury trial taking place in the federal court in Oakland, California, occurs against a backdrop of strong backlash against social media companies globally. There is growing concern that these companies profit at the expense of teenage users, with an increasing body of research indicating that overuse of these algorithm-driven platforms can have harmful effects on the health of adolescents. While agencies in Australia and Europe have implemented or proposed sweeping bans targeting teens over the past year, legislative efforts in the United States have had limited impact, making the courts a critical battleground. This trial is particularly significant for Meta as it focuses on alleged violations of state consumer protection laws and federal privacy lawswith each violation potentially incurring a fine of up to $20,000, and that number quickly accumulating when multiplied by millions of teenage users on Instagram and Facebook. According to Meta's own calculations, if it loses this trial, it could face penalties as high as $1.4 trillion, a figure close to its total market value and unprecedented in legal history. Eric Goldman, a professor at Santa Clara University School of Law who specializes in internet law, stated, "The stakes for this case could not be higher." Although the state attorneys general have not publicly disclosed the exact amount they are seeking in penalties, California attorney Megan O'Neil indicated during a court hearing last week that that figure is closer to $193 billion, pointing out that Meta's maximum theoretical amount was aimed at shock value. Even this lower amount would represent one of the largest settlement amounts in history, comparable to the $206 billion settlement reached in 1998 between state attorneys general and tobacco companies over issues of nicotine addiction. Potential Legal Risks Other social media giantsincluding Google under Alphabet (GOOGL.US), Snap Inc., and TikTokare not part of this trial. However, like Meta, they also face more than 3,000 personal injury lawsuits initiated by individuals and families in the U.S., as well as around 1,300 lawsuits filed by public school districts nationwide, exposing them to potential liabilities amounting to billions of dollars. Some of these cases have already settled to avoid trial, with more landmark cases forthcoming in the coming months. Lawyers behind the cases have gained traction in courts by arguing that the products themselvesthrough their design and functionalitycaused harm, rather than targeting the content itself, as platforms typically enjoy broad liability protections regarding content. This litigation strategy, years in the making, succeeded in its first test in March this year, when a Los Angeles jury awarded $6 million to a 20-year-old woman who claimed that her years of nonstop use of various sites, including Meta's Instagram and Google's YouTube, resulted in anxiety, depression, and body dysmorphic disorder. "Outrageous Damages" Meta denies the allegations from the states and accuses the state attorneys general of seeking unreasonable design modifications and "outrageous damages." In this trial, the jury will only serve in an advisory capacity. U.S. District Judge Yvonne Gonzalez Rogers will ultimately decide whether Meta has committed any violations; if so, what penalties and remedies to impose. The attorneys general from California, Colorado, Kentucky, and New Jersey, who are leading the case, charge that Meta knowingly designed features encouraging compulsive and prolonged use by teenagers while misleading consumers regarding the platform's safety features. Meanwhile, a broader bipartisan coalition encompassing 29 states accuses the company of collecting basic data from users under 13 years old, in violation of the federal Children's Online Privacy Protection Act (COPPA). Younger Users In addition to seeking court orders to limit young users on Meta's platforms, the states are also asking that the company remove features that are allegedly addictive, such as infinite scrolling and content recommendation systems. California Democratic Attorney General Rob Bonta stated in a press release, "We are prepared to hold Meta accountable for its role in fueling the mental health crisis among American children and look forward to the trial." In response, Meta released a statement indicating that while the state attorneys general tout the case as groundbreaking, "their limited claims are factually unfounded and their financial demands are wholly disproportionate." The company contended, "The state attorneys general have provided no evidence to suggest that anyone in their states was misled, instead asserting that having extra Instagram accounts and other harmless features somehow harmed local residents, and are attempting to penalize Meta for common challenges that the entire industry faces, such as age verification." Following opening statements on Tuesday, the trial is expected to last about five weeks. Meta co-founder and CEO Mark Zuckerberg and Instagram head Adam Mosseri have been scheduled to testify, along with dozens of other witnesses, including current and former Meta employees as well as experts in technology and psychology. Before this trial, Meta had just suffered a nearly $1 billion setback in a lawsuit brought by the New Mexico Attorney General. A state court judge in Santa Fe compared Meta to a polluting factory and ordered the company to reform its platform, including implementing time limits and push notifications for young users. Meta was ordered to pay approximately $375 million in civil penalties and $567 million to address the harms suffered by youth in the state due to social media. Publicly Harmful Behavior This ruling serves as a significant test of the legal theory underlying the attorneys general's lawsuit: that social media companies are engaged in publicly harmful behavior that injures the public interest. This theory has previously been applied in public health lawsuits against major tobacco companies and opioid manufacturers. This case in Oakland will examine similar legal grounds in federal court representing multiple states. Last week, Meta's emergency application to halt the trial submitted to the appellate court was unsuccessful. The company argued that the trial should wait until the U.S. Ninth Circuit Court of Appeals clarifies whether the allegations by the attorneys general are protected by the federal Communications Decency Act Section 230, which provides extensive legal shielding for lawsuits against internet platforms. Around 14 other states are also independently initiating social media harm lawsuits against Meta in their respective state courts. The trial for the case filed in Nashville, Tennessee, is nearing its conclusion. Research firm Emarketers senior analyst focusing on social media, Maya Smiley, indicated that the prospect of fines exceeding a trillion dollars "is more symbolic at this stage." She stated, "This represents the seriousness of the allegations against Meta. It is becoming increasingly evident that these lawsuits could not only have a material impact on Meta's business but could fundamentally alter how its platforms operate." The case number is: People of the State of California v. Meta Platforms Inc., 23-cv-05448, and it is being heard in the U.S. District Court for the Northern District of California (Oakland).