Forbes

## Topline

Meta has settled a landmark lawsuit brought by 29 U.S. states over allegations its social media sites were designed to addict children and it misled the public about their potential dangers, court filings released on Wednesday indicate, agreeing to pay a grand total of up to $18 billion to multiple states and territories and implement significant changes to how young people use its platforms.

The federal lawsuit was brought by the attorneys general of 29 U.S. states.

## Key Facts

Meta, the owner of Facebook and Instagram, agreed to settle the claims brought by 29 state attorneys general, denying any wrongdoing but agreeing to pay out $16.7 billion, according to the terms listed in the court filing.

In a statement Wednesday morning, California Attorney General Rob Bonta, said the settlement's terms will "make social media less dangerous for our kids" after the company agreed to "massive transformations" that will take place "within months."

Bonta said California stands to receive between $1.5 billion to $2.1 billion of the funds if the settlement is approved, while New York Attorney General Letitia James said her state could see up to $1.15 billion from the settlement.

Meta also agreed to make a slew of major changes to its platforms for users under age 18 as part of the agreement— including mandatory night mode blocking access between midnight and 6 a.m., a default 2-hour time limit per day, blocking notifications during school hours, delivering prompts to users after every 15 minutes of consecutive use and disabling teenage users from seeing the amount of likes on their posts or using cosmetic surgery or makeup filters.

In a press release Wednesday, Meta called the settlement an "important step," and called on TikTok and YouTube to commit to similar industry standards (Meta did not immediately respond to a request for comment from Forbes).

## Surprising Fact

In addition to settling the claims brought by the 29 states, the agreement also settles claims brought by California, Illinois, New Mexico and Washington, D.C. over privacy violations related to the Cambridge Analytica scandal. Multiple states will receive part of a $459 million settlement, according to the filing on Wednesday.

## Big Number

$18 billion. That's how much Meta says the entire settlement is worth, a figure likely derived from combining the $16.7 billion maximum it can pay out to the states, the $459 million paid out to states related to the Cambridge Analytica claims, as well as a $1 billion settlement with the state of Texas for a similar case separate from the primary one. Ultimately, this is still a drop in the bucket for Meta, which reported revenue of $60.8 billion last quarter. The company's full-year revenue was just over $200 billion in 2025.

## How Will The Payments Work?

In their own press release, Meta said it agreed to pay out 70% of the settlement over the next ten years. The company will pay out the remaining 30% if both YouTube and TikTok commit to implementing daily time limits, nighttime restrictions and age assurance. It also tied these additional funds to its competitors also agreeing to pay an amount equal to that remaining 30%—over 5 billion each. A total of 52 states and territories have signed on to the agreement and are eligible for payouts. The funds will be used for "youth online safety initiatives," Meta said.

## What Will States Use The Money For?

Some states have previewed what they plan to use the settlement funds for. Montana Attorney General Austin Knudsen said the state could use the money to fund crisis intervention centers, after school programs for athletics and the arts, summer camps and outdoor activities and programs aimed to address youth mental health. New York Attorney General James said the funds could go to making classrooms phone-free, training mental health professionals for students and offering more after school or summer programs.

## News Peg

Meta's stock jumped premarket after news of potential settlement talks was first reported by Bloomberg on Tuesday night. The company's stock remains up 2% as of 11:30 a.m. EDT. However, the company also admitted they expected to spend $10 billion in legal expenses in the third quarter of 2026—a charge that was not discussed during their recent Q2 earnings call in July.

## Key Background

This lawsuit brought by the 29-state coalition was one of the biggest legal challenges Meta faced. The trial began on August 18, with states accusing the company of designing their social media apps with features that could prove addictive to children. They also accused the company of misleading the public about the addictive nature of these apps, and collecting data on children under age 13 without their parents' consent. Before the case went to trial, the company said damages from the suit could total $1.4 trillion, coming dangerously close to its market cap.