Meta Platforms has been ordered to pay $942 million in a case to address harm to children via social media. While the money might not be an issue in itself, the trickle of judgments going against the company should ring alarm bells for investors.
A New Mexico judge ordered Thursday that Meta must create a new $567 million abatement fund in addition to paying $375 million in civil penalties that a jury previously ordered.
While the monetary amount is not exactly a crisis for a company with a market capitalization of more than $1.5 trillion, shareholders should still pay attention.
Judge Bryan Biedscheid ruled that Meta's platforms contributed to a public nuisance by harming children's mental health and exposing minors to sexual exploitation. The move is indicative of a shift in legal tactics that has seen plaintiffs focus on how the platforms market their offerings rather than the content on their sites.
"As noxious pollution produced by the factory can harm the common public right to reasonably clean air, the harmful effects of Meta's platforms on children do not stay contained by its platforms," Biedscheid wrote in his ruling.
Meta said it disagreed with the ruling and planned to appeal.
"We remain confident in our record of protecting teens online and will continue to defend ourselves against claims that misrepresent the facts, " a spokesperson said in an emailed statement.
The New Mexico decision comes after a bellwether case has concluded in March when a Los Angeles jury found Meta contributed to the mental-health issues of a young woman during her childhood and teenage years because of the addictive nature of their products.
As Barron's has previously written, the risk is that Meta and its peers face a wave of "Big Tobacco"-style settlements. Meta faces thousands of consolidated lawsuits filed by teenagers, school districts, and state attorneys general against the platforms, alongside other companies that run social-media sites.
In one consolidated case coming to trial this month, four states -- California, Colorado, New Jersey, and Kentucky -- are set to ask the court for up to $1.4 trillion in damages, according to Meta's own calculations of how the states could proceed.
Meta shares were up 1.1% on Friday. Shareholders aren't panicking yet, though they should at least be attentive.
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