A judge ruled on Wednesday that Meta must pay $25 billion to New Mexico, after a jury found that the company misled users regarding its privacy and content review policies for Facebook.
Judge Francis Matthew ( Francis Mathew ) announced this amount. State Attorney General Raul Torres ( Ra úl Torrez ) stated that this is “one of the largest state-level judgments in U.S. history against a company, and possibly even the largest one.”
Torres stated that this ruling should serve as a wake-up call for tech companies, and New Mexico will continue to hold them accountable.
"This ruling should be a signal, a clear and unequivocal message to Silicon Valley," Torres said at a press conference.
According to the New Mexico Constitution, fines for violations of consumer protection laws are to be allocated to the state's education expenditures.
Torres said, "We may have already paid for the school construction for the next 100 years." He also acknowledged that if Meta appeals as expected, this money will be temporarily frozen.
Meta previously stated that the company planned to appeal against the ruling in September, but did not immediately respond when asked about the amount involved. Meta, headquartered in Menlo Park, California, was scheduled to release its quarterly financial report on Wednesday afternoon, and after the penalty was announced, its stock price rose by 2% during trading.
New Mexico files a separate lawsuit
In September, the jury determined that Meta was responsible for more than 43 violations of New Mexico's consumer protection laws. Prior to this, the political consulting firm Cambridge Analytica ( Cambridge Analytica ) collected data from Facebook users to create targeted political advertisements for the 2016 elections.
Except for New Mexico, the other 48 states have reached settlements with Facebook in nationwide cases, but New Mexico has chosen to sue this social media company separately in court.
Lawyers in New Mexico once sought compensation of $35 to $40 billion, believing that only an amount sufficient to affect the company's stock price would compel the company to change its practices.
The lawyer for Meta argued that the compensation should not exceed $3.4 billion, stating that if the amount reached ten times that or even more, it would violate due process and the constitution, and it would not be upheld in an appeal.
Meta argued that the state government failed to prove the company's misleading statements regarding privacy, and that content censorship actually caused harm to residents of New Mexico. The company stated that during the appeal period, the fines will continue to accrue interest, but the number of alleged violations may decrease.
Attorney Matt Nicholson ( Matt Nicholson ) stated in court that a sum of up to $40 billion would be "shocking to the point of causing moral distress"; meanwhile, Randy Mackin ( Randi McGinn ), a lawyer from New Mexico, called on people to stand up against "those tech giants who think they are invulnerable and can do whatever they want."
The company claims that the state government failed to prove the damage.
The core allegation in the state case is that Facebook misled users regarding a data breach. The breach originated from a third-party personality test app that collected approximately 87 million user profiles and sold the data to the political consulting firm Cambridge Analytica, which used it to generate targeted advertisements. The company no longer exists, and its clients included President Donald Trump's campaign team in 2016.
New Mexico lawyers argue that the public statements regarding platform privacy by Meta have misled residents of the entire state, not just users of Facebook. Lawyers from Facebook claim that the state government has failed to prove whether these misleading statements have actually caused harm to people.
At the hearing on October 1st, Nicholson said, 'The jury did not find that any resident of New Mexico heard or saw these statements, nor that they were harmed as a result.'
The New Mexico prosecution also accused Facebook of allowing incorrect information or violent content to spread on the platform. The defense strongly denies these accusations, stating that the company's content review policy is comprehensive and that freedom of speech must also be taken into consideration.
The jury determined that there were over 43 million violations of state laws.
In August, after 48 states signed a $18 billion settlement agreement, New Mexico became the only state to continue with trials regarding the Cambridge Analytica scandal. Apart from New Mexico, Florida is the only state that did not sign the settlement agreement; the agreement also included a provision that Meta would be exempt from any future liabilities related to the Cambridge Analytica data breach.
During the trial, the jury assessed whether Facebook misled users regarding privacy and content review information on 34 different occasions. The state prosecution argued that the statements of Facebook misled residents of the entire state of New Mexico, with the impact extending beyond just social media users.
In the end, the jury accepted this view and determined that Facebook committed 2.1 million violations in some of the charges, bringing the total number of violations to over 43 million.
The lawyer for Facebook argued in subsequent court documents that the state consumer protection law does not apply to New Mexico residents who did not use the platform during the relevant period.
After the ruling, Torres told reporters that all the compensation funds will be placed into the state education system fund. The state government is also seeking a ban to prevent similar practices from continuing to occur.
Meta Statistics on Doubtful Evidence and Number of Violations
When appealing against the jury's verdict, Meta may seek to reduce the number of violations in order to lower the total fine. Company lawyers stated that counting the number of violations based on the number of people who may have heard or seen the company's misleading statements is unprecedented at the state level, and there is no evidence to suggest that these statements caused any harm to anyone.
In his closing remarks, attorney Facebook stated that the state's evidence was outdated, and despite five years of collecting materials, New Mexico only found another case of data breach.
In one of the rare victories for the defense, the jury determined that the state government failed to prove that Facebook made false statements regarding the removal of harmful content, including incorrect information about the COVID-19 pandemic.
The state authorities claim that the company favors certain accounts and allows violent or inaccurate content to spread. State attorney Randy MacKinn stated in his closing remarks that Facebook profited from harmful content, a claim that CEO Mark Zuckerberg denied in his video testimony. Zuckerberg stated that the company must carefully balance freedom of speech with content moderation.
Facebook Lawyers stated that since the state government filed a lawsuit in 2021, the company has adjusted its policies and will remove 99% of the content that violates the standards.
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Shulter ( Schuettler ) reports from Phoenix. Shulter is a member of the journalist team of the Associated Press/ Report for America state legislature news initiative. Report for America is a non-profit national service project that assigns journalists to local news bureaus to report on overlooked issues.
