A judge on Thursday ordered Meta to pay New Mexico US$25 billion (NZ$43.8 billion) after a jury found the company liable for deceiving users about privacy on Facebook, marking the biggest fine ever against the tech giant.
Facebook’s deception was intentional and executives consistently misled users about how the platform worked, state District Court Judge Francis J. Mathew wrote in his ruling.
"Facebook promised users that they [the users] controlled their data. This was false," he said.
Jurors in September found Meta liable for over 43 million violations of New Mexico consumer protection laws for making misleading public statements about how it handled users' personal data. The case was brought after political consulting firm Cambridge Analytica harvested Facebook data to generate targeted political ads during the 2016 election season.
The award will serve as a warning to tech companies that New Mexico will hold them accountable, state Attorney General Raúl Torrez said at a news conference.
"This judgment should be a signal, an unambiguous message, to Silicon Valley," he said.
Meta said the ruling and Torrez's office's approach to enforcement "makes it all but impossible to do business in the state of New Mexico".
"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," C.J. Mahoney, the company's chief legal officer, said in a statement.
The Menlo Park, California, company’s shares were trading 2% higher in the immediate aftermath of the penalty announcement, and it was scheduled to report its quarterly earnings later Thursday.
New Mexico goes it alone
In August, Meta reached a settlement with nearly all states and territories — except New Mexico and Florida — to pay $18 billion and add stronger child-safety measures to its Facebook and Instagram platforms.
Meta has reached a $30 billion settlement over a landmark teen social media addiction trial. (Source: 1News)
The settlement ended a trial over teen social media addiction and resolved a pivotal case years in the making that sought to hold the tech giant accountable for the role its platforms played in undermining children’s mental health. The effort targeted features designed to grab young people’s attention.
New Mexico didn’t join the multistate settlement, choosing to go after the company on its own.
During the trial, prosecutors cited a 2010 Washington Post op-ed from Facebook chief executive Mark Zuckerberg, in which he wrote that the company didn't sell user data.
"You have control over how your information is shared," Zuckerberg said. "We do not and never will sell any of your information to anyone."
Attorneys for New Mexico had sought US$35 billion to US$40 billion (NZ$61.3 billion to NZ$70.1 billion), arguing that the company would only change its ways with a sum that affected its stock price.
Meta's lawyers, meanwhile, argued that the state failed to prove the company made misleading statements about privacy and that content moderation actually harmed New Mexicans. They contended that the company should pay no more than US$3.4 billion (NZ$5.9 billion), saying an award 10 times that or even more would violate due process, was unconstitutional and would not hold up on appeal.
Although interest would accrue on the penalty during the appeal process, Meta could succeed in reducing the number of violations for which it is found liable.
The US$25 billion (NZ$43.8 billion) award far exceeds the US$5 billion (NZ$8.7 billion) fine that the Federal Trade Commission levied against Facebook in 2019.
Peter Ormerod, an associate law professor at Villanova University, was surprised by the size of the New Mexico judgment because previous legal settlements over Cambridge Analytica were much lower.
"It comes out to about US$12,000 (NZ$21,042) per person in New Mexico, and that's just a very large number. It's quite unlike anything else we've seen," Ormerod said.
Under the New Mexico Constitution, fines for violations of consumer protection laws go toward state education spending. But it could take years before the state sees any of the money while the company appeals.
Company argues that the state failed to prove harm
The state's case focused on accusations that Facebook deceived users about a breach stemming from a third-party personality quiz that harvested data from roughly 87 million profiles and sold it to Cambridge Analytica. The now-defunct firm's clients included Donald Trump's 2016 presidential campaign.
Attorneys for New Mexico argued that the state's entire population, not just Facebook users, were deceived by the company. They also said Facebook allowed misinformation or violent content to proliferate.
Meta attorneys vehemently denied the allegations, saying the company’s content moderation policies were robust and that freedom of speech must be considered. They argued that the state failed to prove people were harmed by deceptive statements.
In one of the tech giant's few wins, jurors found that the state didn’t prove Facebook made false claims about removing harmful content, including misinformation about the Covid-19 pandemic.
During a video deposition, Zuckerberg denied the state's claims that Facebook profited off harmful content. He said the company had to balance freedom of speech with content moderation.
Attorneys for the company said it has changed its policies since the lawsuit was filed in 2021 and that it catches and removes an estimated 99% of the content that violates its standards.
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