At a Glance:
- Four states (California, Colorado, Kentucky, New Jersey) opened arguments against Meta in federal court on Tuesday
- Case centers on claims Meta hooked kids on Instagram/Facebook and harvested data from under-13 users
- Meta faces potential penalties up to $1.4 trillion if it loses
- Ruling could force changes like scrapping infinite scroll for some users
- Case is a bellwether for a larger suit involving 24 more states
A landmark trial testing how far Meta went to keep young users scrolling began this week, and the stakes couldn’t be higher for the company’s bottom line.
Meta (META) shares slipped 4.45% as the case opened before Judge Yvonne Gonzalez Rogers in Oakland.
State attorneys general accused Meta of designing features like infinite scroll specifically to hook young users, while quietly collecting data from children under 13 without parental consent. California deputy AG Megan O’Neill said internal research showed kids struggled to log off even when they knew the apps were hurting them.
Meta’s attorney Paul Schmidt pushed back, arguing the company’s own studies were used to improve teen safety, not exploit it. He noted Meta deleted 1.4 million under-13 accounts over four years and that CEO Mark Zuckerberg has pushed for app-store-level age verification.
Why it Matters
For traders, the outcome could reshape Meta’s product roadmap and its legal exposure heading into 2027 – a $1.4 trillion penalty, however unlikely, would dwarf anything the company has paid out so far, including a recent $567 million settlement in New Mexico.
Watch for early rulings on evidence and witness testimony in the coming days – they’ll signal which way this trial is leaning.
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Source: Yahoo Finance
