Meta Hit With $25 Billion Penalty In New Mexico Over Facebook Data Privacy Misleading Claims

A New Mexico judge has ordered Meta Platforms to pay $25 billion after a jury found that the company made misleading statements about data privacy, handing the social media giant one of the largest financial penalties in US history.

The ruling, issued on Wednesday by Judge Francis Mathew, follows a lawsuit brought by New Mexico over allegations that Meta misled Facebook users about who could access their personal information. The case stems from the Cambridge Analytica scandal, in which a British political consulting firm involved in Donald Trump’s 2016 presidential campaign obtained data from millions of Facebook users without their consent.

In his order, Mathew said the company’s conduct had been systematic and central to its business practices. Although he found that state law could warrant a penalty exceeding $219 billion, he reduced the amount to $25 billion.

Meta has said it is confident of winning an appeal.

Meta Vows To Challenge $25 Billion Judgment

C.J. Mahoney, Meta’s chief legal officer, 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.

He argued that the lawsuit sought to impose a tax on speech by enforcing new rules governing what people could say online.

New Mexico Attorney General Raúl Torrez, however, described the penalty as one of the largest financial sanctions imposed on a corporation in US history.

“It has been a long time coming holding Big Tech accountable,” Torrez said at a press conference in Albuquerque after the ruling. He called the judgment a clear warning to technology companies that the state intended to protect consumers.

Cambridge Analytica Scandal At Centre Of Lawsuit

New Mexico filed the lawsuit in 2021 after revelations that Cambridge Analytica had harvested personal information from as many as 87 million Facebook users through a third-party application.

The state accused Meta of misleading users about access to their data and its handling of hate speech and misinformation on the platform. It alleged that the company knew third parties had broad access to user information and tolerated hate speech or other harmful content when doing so benefited its business.

Cambridge Analytica, which has since ceased operating, used the data for voter profiling and targeted political messaging.

Jurors in September found that Meta and its leadership had made 26 misleading statements concerning data privacy, hate speech and other issues. By multiplying those statements by their potential audience, the jury concluded that the company had committed more than 43 million violations of New Mexico’s consumer protection laws.

At a hearing on October 1, Randi McGinn, a lawyer representing New Mexico, asked the court to impose a penalty of between $35 billion and $40 billion.

“This court should speak to Meta in the only language it understands, which is money, and the value of its stock price,” McGinn argued.

Meta had urged the judge to cap the penalty at $3.45 billion. In court filings, the company argued that it did not sell users’ data and that the state had failed to prove that any consumer had actually been misled.

Previous Penalties And Other Lawsuits

Meta had previously faced a $5 billion penalty from the US Federal Trade Commission in 2019 over the Cambridge Analytica scandal.

Six other states also settled their lawsuits against Meta relating to Cambridge Analytica for a combined $459.2 million. The settlements formed part of a $17.1 billion multistate agreement the company reached in August to resolve claims that its platforms had harmed teenagers’ mental health.

The latest judgment comes as Meta faces thousands of lawsuits and mounting pressure from lawmakers over the effects of Facebook and Instagram on young people.

Earlier this year, New Mexico secured $942 million in two trials involving allegations that Meta facilitated the sexual exploitation of young people on Instagram and Facebook and misled consumers about the platforms’ safety. Another trial related to the wider scrutiny of the company’s platforms is scheduled to begin next week.

Analysts Expect A Prolonged Appeal Battle

Despite the size of the penalty, analysts expect Meta to continue fighting the case through the appeals process.

Gil Luria, head of technology research at D.A. Davidson & Co, described the ruling as costly but unlikely to affect Meta’s overall valuation significantly.

“Meta is worth nearly two trillion dollars, and will likely continue to appeal these cases and drag them out,” Luria said.

The appeal is expected to prolong the legal battle over the company’s responsibility for protecting users’ data and the extent to which consumer protection laws can be used to hold major technology platforms accountable.