A judge on Wednesday ordered Meta to pay New Mexico $25 billion after a jury found the company liable for deceiving users about privacy and content moderation policies on Facebook.
Judge Francis Mathew handed down the amount, which state Attorney General Raúl Torrez described as “one of the largest, if not the single largest state verdict against a company in American history.”
Torrez said the verdict should serve as a warning for technology companies and that New Mexico would continue to hold them accountable.
“This judgement should be a signal, an unambiguous message, to Silicon Valley,” Torrez said at a news conference.
Under the New Mexico Constitution, fines for violations of consumer protection laws go to 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 if Meta appeals as expected.
Representatives for Meta, which previously said it plans to appeal the September verdict, did not immediately respond to a message seeking comment on the amount. The Menlo Park, California-based company was scheduled to report its quarterly earnings on Wednesday afternoon, and its shares were trading 2 per cent higher following the announcement of the penalty.
Jurors in September found Meta liable for over 43 million violations of New Mexico consumer protection laws, after a political consulting firm, Cambridge Analytica, harvested Facebook user data to generate targeted political ads for the 2016 election.
Forty-eight other states settled with Facebook in a nationwide case, but New Mexico chose to take the social media company to court on its own.
Attorneys for New Mexico had sought between $35 billion and $40 billion, arguing that the company would only change its ways with a sum large enough to affect its stock price.
Lawyers for Meta argued for payment of no more than $3.4 billion. They said an award 10 times that sum or more would violate due process, was unconstitutional and would not hold up on appeal.
Meta argued that 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 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, was 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 deceptive 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 on Oct. 1.
New Mexico prosecutors also argued that Facebook allowed misinformation and violent content to spread on the platform. Defence attorneys vehemently denied the allegations, saying the company’s content moderation policies are robust and that freedom of speech has to be considered.
New Mexico was the only state to pursue a trial over 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 34 separate times whether Facebook misled users about privacy and content moderation. State prosecutors, however, argued that 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 do not apply to people in New Mexico who were not using the platform at the time.
Torrez told reporters after 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.
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 defence, jurors found that the state did not prove that Facebook made false claims about removing harmful content, including misinformation about the COVID-19 pandemic.
The state said the company favoured certain accounts and allowed violent or inaccurate content to spread. Attorney Randi McGinn said in her closing argument for the state that Facebook profited from 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 per cent of content that violates standards.
