A judge on Wednesday ordered Meta to pay New Mexico $25 billion after a jury found the company liable for deceiving users about privacy, in what marks the largest fine ever against the owner of Facebook.
The verdict should be seen as a warning for tech companies that New Mexico will hold them accountable. state Attorney General Raúl Torrez said at a news conference.
“This judgement should be a signal, an unambiguous message, to Silicon Valley,” Torrez said.
Under the New Mexico Constitution, fines for violations of consumer protection laws go toward state education spending.
“We may have paid for the construction of schools for the next 100 years,” said Torrez, who acknowledged that the money would be tied up as Meta appeals.
Representatives for Meta, which previously said it plans to appeal the September verdict, didn't immediately respond to a message seeking comment about the amount. The Menlo Park, California-based company was scheduled to report its quarterly earnings Wednesday afternoon and its shares were trading 2% higher following the penalty announcement.
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.
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 wasn't part of the multistate settlement because it was pursuing its own case.
Jurors in September found Meta liable for over 43 million violations of New Mexico consumer protection laws when a political consulting firm, Cambridge Analytica, harvested Facebook user data to generate targeted political ads for the 2016 election.
“Facebook promised users that they (the users) controlled their data. This was false,” Judge Francis J. Matthew wrote in his judgement.
Attorneys for New Mexico had sought $35 billion to $40 billion, arguing that the company would only change its ways with a sum that affected its stock price.
Lawyers for Meta argued for paying no more than $3.4 billion. An award 10 times that or even more would violate due process, was unconstitutional and would not hold up under appeal, they said.
Meta argued the state failed to prove misleading statements about privacy and that content moderation actually harmed New Mexicans. Interest on the penalty would accrue during an appeal, but the number of violations Meta is charged with could be reduced.
Meta attorney Matt Nicholson argued in court that a sum as high as $40 billion would be “shocking to the conscience” while an attorney for New Mexico, Randi McGinn, urged standing up to “tech titans who think they are bulletproof and can do whatever they want.”
The fine in the case far exceeds the $5 billion fine that the Federal Trade Commission levied against Facebook in 2019.
Company argues that the state failed to prove harm
The state's case focused on accusations that Facebook deceived users about a data breach stemming from a third-party personality quiz that harvested data from roughly 87 million profiles and sold it to a political consulting firm, Cambridge Analytica, to generate targeted ads. The now-defunct firm’s clients included the 2016 campaign for President Donald Trump.
Attorneys for New Mexico argued that the state's entire population, not just Facebook users, were deceived by the company's public statements about privacy on the platform. Facebook's lawyers argued that the state failed to prove whether people were actually harmed by these deceiving statements.
“The jury didn’t make findings that any New Mexican heard or saw these statements, or was harmed by them," said Nicholson during a hearing Oct. 1.
New Mexico prosecutors also argued that Facebook allowed misinformation or violent content to proliferate on the platform. Defense attorneys vehemently denied the allegations, saying the company’s content moderation policies are robust and freedom of speech has to be considered.
Jury finds millions of violations
New Mexico was the only state to pursue a trial around the Cambridge Analytica scandal after 48 other states signed a settlement for $18 billion in August.
Besides New Mexico, Florida was the only other state that did not sign the settlement, which included an agreement to release Meta from future liability related to the Cambridge Analytica privacy breach.
During the trial, jurors assessed whether Facebook misled users about privacy and content moderation 34 separate times. State prosecutors, though, argued Facebook’s statements deceived the entire population of New Mexico and extended beyond social media users.
In the end, jurors agreed with this premise and found Facebook liable for 2.1 million violations on certain counts, bringing the total number of violations to over 43 million.
Facebook's attorneys have argued in subsequent court filings that the state's consumer protection laws don't apply to people in New Mexico who weren't using the platform at the time.
Torrez told reporters following the verdict that all money awarded will go into a fund for the state’s education system. The state is also seeking an injunction to stop similar practices.
Meta questions evidence and tally of violations
In appealing the jury's verdict, Meta might reduce the number of violations and therefore the total financial penalty. Lawyers for the company said it was unprecedented for the state to count the number of violations based on how many individuals may have heard or seen the misleading statements from the company, arguing there was no evidence these statements ever harmed anyone.
During closing arguments, lawyers for Facebook said the state’s evidence was outdated and that despite having five years to gather material, New Mexico found only one other instance of a data breach.
In one of the few wins for the defense, jurors found the state didn’t prove that Facebook made false claims about removing harmful content, including misinformation about the COVID-19 pandemic.
The state said the company favored certain accounts and allowed for violent or inaccurate content to proliferate. Attorney Randi McGinn said in her closing argument for the state that Facebook profited off harmful content, which CEO Mark Zuckerberg denied during his video deposition. Zuckerberg said the company has to carefully balance freedom of speech with content moderation.
Attorneys for Facebook said the company has adapted its policies since the state’s lawsuit was filed in 2021 and that it removes 99% of content that violates standards.
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Schuettler reported from Phoenix. Schuettler is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.
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