Meta Faces $1.4 Trillion Social Media Lawsuit — Risks Remain Regardless of Outcome

According to Yahoo Finance, Meta (META-US) is facing off against attorneys general from four U.S. states in court. The lawsuit alleges that the social media company intentionally designed its apps to keep children and young users engaged, while making false statements about the potential harms caused by its platforms.

Meta denies the allegations, stating it has implemented various features and options to protect younger users on its platforms.

If Meta loses this case, which is being presided over by Judge Yvonne Gonzalez Rogers at the U.S. District Court for the Northern District of California, Oakland Division, these states could force Meta to fundamentally rethink its app designs—including removing core features such as infinite scrolling and disappearing posts.

However, even if Meta wins, the company might still modify its services to avoid thousands of subsequent lawsuits.

Rob Lalka, a professor at Tulane University’s Freeman School of Business, said, 'This is a moment Meta has long avoided. No matter the outcome, this will change the trajectory of the company.'

Meta vs. State Governments

This lawsuit is a test case within a broader set of litigation involving 25 additional states. Attorneys general from California, Colorado, Kentucky, and New Jersey accuse Meta of violating consumer protection laws by misleading users into believing its apps are safe. They also allege Meta breached the Children’s Online Privacy Protection Act (COPPA) by collecting data from children under 13 without parental consent.

This California lawsuit is the latest in a series of legal actions Meta faces over its impact on teens and young users. Meta previously lost two cases in Los Angeles and New Mexico and says it plans to appeal.

While each case differs, collectively they focus on how Meta designs its products—not the content hosted on them. This distinction is crucial because Section 230 of the Communications Decency Act shields Meta and other online platforms from liability for user-posted content.

Daryl Lim, a professor at Penn State Dickinson Law, noted, 'For me, the larger significance of this case is whether courts will begin to accept the idea that design choices in social media products are something companies can be held accountable for—not just the issue of users posting harmful content.'

He added, 'If this legal argument continues to gain traction, it won’t just alter Meta’s litigation risks—it will have broader implications for the entire social media industry.'

Meta calls the lawsuit brought by state attorneys general a '$1.4 trillion money grab,' referring to the amount the states claim Meta would owe if it were found liable.

A Meta spokesperson said ahead of Tuesday’s opening arguments, 'State attorneys general may call this a landmark case, but their limited claims lack evidentiary support, and their financial demands are wildly disproportionate.'

The spokesperson added, 'State attorneys general have no evidence that anyone in their states was misled, claim harmless features like having multiple Instagram accounts somehow harmed residents, and seek to punish Meta for industry-wide challenges like age verification. They’re not acting based on facts or law—they’re chasing an absurd damages figure. We stand by our record of providing strong protections for teens and look forward to presenting our case in court.'

Nevertheless, Lalka believes these changes are still insufficient.

He said, 'Meta will certainly try to prove it has taken steps to protect children. But what these state attorneys general are demanding are measures Meta hasn’t voluntarily taken before.'

If a judge rules against Meta and forces product redesigns, Syracuse University communications professor Alexis Shore Ingber says Meta can still thrive. 'Can we build effective product designs without compromising Meta’s business model? The answer is yes.'

She added, 'Overall, Meta still has many ways to profit while committing to not deceiving consumers into unsafe usage behaviors. I think Meta needs to invest resources into researching how to make money while protecting consumers.'