Meta Hit With $25 Billion Penalty for Misleading Users About How Facebook Handled Their Data

Meta Platforms has been ordered to pay $25 billion to New Mexico after a judge ruled that Facebook misled consumers for years about how it handled their personal information, delivering one of the largest financial penalties against a company in US history.

The ruling, issued on Wednesday, followed a jury verdict finding that Facebook violated New Mexico's consumer protection law nearly 44 million times. The case centred on the social media platform's representations about data privacy, third-party access to user information, and its handling of harmful content.

Judge Francis Mathew said Facebook's communications formed part of a deliberate strategy to mislead the public. The case stemmed from the Cambridge Analytica scandal, which exposed how personal information collected through a third-party Facebook application reached a political consulting firm without users' informed consent.

Meta's Penalty Could Have Gone Up to $219 Billion

The $25 billion penalty followed a jury's findings that Facebook had committed 43,899,725 violations of New Mexico's Unfair Practices Act. The law allows civil penalties of up to $5,000 for each violation, meaning the potential award could have exceeded $219 billion.

Judge Mathew reduced the amount to $25 billion after considering the scale and duration of the alleged misconduct, the number of violations, and the evidence presented during the proceedings.

The state argued that Facebook misled users about who could access their personal information and how effectively the company protected them. Prosecutors also challenged the platform's handling of misinformation and hate speech.

New Mexico Attorney General Raul Torrez described the judgment as one of the largest financial penalties against a corporation in US history, saying it demonstrated that major technology companies could be held accountable under consumer protection laws.

Cambridge Analytica Scandal at the Centre of the Case

New Mexico filed its lawsuit in 2021, following revelations about Cambridge Analytica, a now-defunct British political consulting firm, that obtained information from as many as 87 million Facebook profiles through a third-party personality quiz application.

The information was used to build voter profiles and support targeted political advertising. The firm had connections to clients involved in the 2016 US presidential election, including Donald Trump's campaign.

The New Mexico case examined more than the original data scandal. State officials argued that Facebook's public statements gave consumers a misleading impression of the safeguards protecting their information and the company's response to potential misuse.

The proceedings also scrutinised Facebook's handling of harmful content. However, jurors rejected some of the state's claims, including allegations that the company made false statements about removing harmful content.

Meta Plans to Appeal the Judgment

Meta's chief legal officer, CJ Mahoney, criticised the ruling and the state attorney general's approach to the case. 'This ruling, and the Attorney General's approach to this enforcement, makes it all but impossible to do business in the state of New Mexico,' Mahoney said in a statement, according to CBS News.

He also argued that the lawsuit sought to impose a penalty on speech by enforcing new rules governing what people could say online. The company maintains that it has grounds to challenge the judgment.

An appeal could take considerable time, and the final amount Meta must pay may change as the case progresses. The court order specified that interest will accrue at 15% annually until the penalty is paid in full. On a $25 billion balance, that equates to $3.75 billion in interest over one year, before any compounding.

The latest penalty substantially exceeds the $5 billion charge imposed on Facebook by the US Federal Trade Commission in 2019 over privacy violations. It also follows years of litigation and settlements arising from the Cambridge Analytica controversy.