Meta, the parent company of Facebook, Instagram, and WhatsApp, has been ordered to pay its largest fine to date of $25 billion (£18.6 billion) by a judge in New Mexico. This decision follows a two-week trial where it was revealed that Meta had been deceptive regarding its handling of Facebook user data.
The judge noted that the dishonesty went beyond Facebook’s data management, impacting the core business practices of the company.
CJ Mahoney, Meta’s chief legal officer, expressed that the ruling renders it nearly impossible for the company to operate in New Mexico and indicated plans to appeal, which he believes will be successful.
This fine surpasses previous settlements Meta has made this year, including an $18 billion agreement with California related to child safety issues. The lawsuit from New Mexico originated from Meta’s involvement in the Cambridge Analytica scandal, where data from millions of Facebook users was used for political consulting during the 2016 US Presidential election.
New Mexico’s accusations also included claims that Meta misled the public about its management of hate speech content and the enforcement of related regulations. A jury found that the company had intentionally misrepresented these aspects as well.
Meta has contested these allegations, with Mahoney arguing that the lawsuit aims to impose restrictions on free speech to enforce new online regulations. The state’s legal team highlighted that Meta executives repeatedly assured that user data was not shared with third parties without consent, which was proven false during the trial.
The jury concluded that Meta had violated state laws over 40 million times, affecting approximately two million residents in New Mexico. Attorney General Raúl Torrez remarked that today’s ruling signifies that no corporation, regardless of size, is exempt from accountability.
The state pursued fines as high as $40 billion, while Meta argued that any fine exceeding $3.4 billion would be unconstitutional. Judge Francis Mathew decided on the $25 billion penalty, equating it to Meta’s quarterly profits.
Judge Mathew further stated that the violations and public misrepresentations spanned over 11 years, from 2010 to 2021, with communications from senior executives, including Mark Zuckerberg, crafted to mislead the public.
Although the calculated penalty for thousands of violations was $219 billion, it was reduced to the final fine of $25 billion. This ruling follows a $5 billion penalty imposed by the US Federal Trade Commission in 2019 regarding data privacy issues.
New Mexico has consistently challenged Meta in court, recently fining the company nearly $1 billion for misleading claims about the safety of its platforms for children. In that lawsuit, the judge likened Meta to an industrial polluter, with the nature of its pollution being the psychological harm and exploitation of children.
Despite facing hefty fines, Meta is investing significantly in artificial intelligence (AI) to catch up with competitors. Zuckerberg mentioned that the consumer-oriented AI tool Muse currently serves 10 million users, and the goal is to expand its reach to billions.
Meta plans to invest at least $135 billion this year in AI initiatives, potentially increasing to $145 billion. This level of spending resulted in a negative cash flow exceeding $2 billion, a first since the company went public 14 years ago, as assessed by a BBC review of financial records.
While Meta’s revenue rose 26% year-on-year to reach $64.5 billion from July to September, and profits tripled to $9.8 billion, the company remains committed to further AI investments. CFO Susan Li announced a new stock split, hinting at the ongoing costs associated with AI development and indicating a need for greater funding flexibility in the coming year.
