New Mexico verdict: Meta owes $25 billion over data practices

A New Mexico judge ordered Meta to pay $25 billion this week for violating state consumer protection laws.

The lawsuit began in 2021 when the state attorney general alleged that Meta misled users about data handling in a dispute linked to the Cambridge Analytica scandal. The legal team later added claims regarding content moderation policies. A jury sided with the state in September, leading to the recent financial ruling.

The penalty follows a series of legal setbacks for the company this year. In New Mexico, juries previously ordered Meta to pay $375 million for child safety violations and $567 million in a second phase of that same case. In Los Angeles, a superior court awarded $6 million to a young woman who claimed Meta and YouTube harmed her mental health through addictive design. Meta also agreed in August to pay between $17 billion and $18 billion over 10 years to settle a federal case brought by most US states.

The $25 billion figure is a reduction from the maximum possible penalty of $219 billion. That maximum amount was calculated by applying a $5,000 fee to each of the 43 million violations found by the jury. The state originally requested a penalty between $35 billion and $45 billion. Meta is currently valued at approximately $1.7 trillion. The company's stock price fell on Thursday, a drop attributed to a mix of factors including its earnings report, heavy spending on artificial intelligence, and a general decline in AI-related stocks.

Meta intends to challenge the decision. C.J. Mahoney, the company's chief legal officer, stated that the ruling and the attorney general's enforcement approach make it "all but impossible to do business in the state of New Mexico." He characterized the lawsuit as an attempt to "impose a tax on speech" and expressed confidence that the company will prevail on appeal.

Legal experts suggest that a single fine may not be enough to force operational changes. Corban Rhodes, a partner at DiCello Levitt, which represents New Mexico, noted that each time Meta declines to settle a case, trial evidence becomes public record. This material can then be used in future litigation. The New Mexico trial placed more than 100 exhibits into the public domain, including documents that had been kept secret for over a decade.

One such exhibit is a 2018 email from then-COO Sheryl Sandberg. Sent days after the Cambridge Analytica scandal broke, the email stated that the biggest issue was that "there were a MILLION developers with access to the data." Sandberg also warned of "many, many, many more moments like this in the next month and year."

Insurance coverage may also become a source of pressure on the company. In March, a Delaware judge ruled that insurers have no duty to defend Meta against the thousands of lawsuits it currently faces. Some experts argue that insurers could act as a form of AI governance by requiring responsible design as a condition for coverage.

Brian Quinn, a Boston College law professor who studies corporate law, said the sharpest pressure might come from shareholders focusing on individual directors rather than the company as a whole. Under current indemnification law, a finding of legal violation does not automatically make executives liable if they acted in good faith. However, if the same individuals keep appearing in the same set of facts, shareholders may demand that the company stop indemnifying them, leaving executives less protected.

Regulators and courts have focused on the effects of earlier social media eras, and Rhodes expects the next wave of litigation to center on AI.