Meta Platforms, Inc. (NASDAQ:META) is on trial in federal court in Oakland, California, where 29 states led by California Attorney General Rob Bonta are seeking penalties as high as $1.4 trillion and court orders forcing changes to Facebook and Instagram, Bloomberg reported. California deputy attorney general Megan O’Neill said in opening statements that Meta’s business model is to “hook the users, hold them for as long as they can, harvest their data, and then hide the truth from the public,” CNBC reported. States want the court to eliminate infinite scroll, autoplaying video, disappearing Instagram Stories, beauty filters, and algorithm-driven feeds for minors nationwide.
The trial follows a loss in New Mexico, where a judge fined Meta $942 million and called the company a “public nuisance.” An eight-person jury is advisory; Judge Yvonne Gonzalez Rogers will decide the case, with a ruling expected in October.
Bull Case
The jury’s role in this trial limits the immediate legal risk from any one verdict. The eight-person jury is advisory only, CNBC reported. It means Judge Gonzalez Rogers, not a jury swayed by emotional testimony, ultimately decides liability and remedy, a structure that tends to produce more legally conservative outcomes than a binding jury award.
Meta Platforms, Inc. (NASDAQ:META) has a real defense, not just a denial. Meta’s attorney Paul Schmidt told the court the states “cherry-picked documents,” and the company says it has flagged 1.4 million accounts over four years where users appeared to be under 13, evidence Meta will use to argue it actively enforces age limits rather than ignoring them.
Wall Street does not appear to be pricing in an existential outcome. CNBC’s Jim Cramer said investors should not “sell Meta on litigation risk” because “the stock is worth the wait,” a signal seasoned market watchers see this as a manageable risk for a company of Meta’s scale.
Meta turned a massive threat into a clear, manageable cost. The firm agreed to pay up to $18 billion over 10 years to settle claims with almost every U.S. state, while keeping its personalized feeds and targeted ads running to protect its core advertising income.
Bear Case
New Mexico shows what a loss can cost, and Meta Platforms, Inc. (NASDAQ:META) is on a losing streak heading into this larger trial. Meta lost in New Mexico less than two weeks before California’s opening arguments, and New Mexico’s attorney general told CNBC, “you could wake up with a headline judgment that is, as I’ve said, astronomical,” a warning from someone who already beat Meta on similar claims.
Meta faces massive financial risks if other states win similar lawsuits. California, Colorado, Kentucky, and New Jersey are demanding over $1 trillion in damages, an amount that rivals Meta’s entire $1.5 trillion market value, while 25 other states prepare for future trials.
The remedies sought would reshape Meta’s core product, not just fine it. States want like counts eliminated for minors, infinite scroll and autoplay ended, and recommendation algorithms redesigned nationwide- changes that strike directly at the engagement mechanics Meta’s advertising business depends on rather than a penalty it can simply absorb.
This is a coordinated, multi-state legal campaign that keeps expanding, not an isolated case. Massachusetts, Kentucky, Colorado, and New Jersey are all pursuing related claims alongside California; a federal judge already rejected Meta’s motion to dismiss the Massachusetts case, and analyst Kate Winick compared the pattern to 1990s Big Tobacco litigation, warning “this trial is potentially the end of social media as we know it.”
Conclusion
The financial penalty is not really the point of this trial; the potential redesign of Instagram and Facebook’s core mechanics is. The bull case rests on an advisory jury, a real evidentiary defense, and a market treating this as manageable so far. The bear case rests on Meta’s recent New Mexico loss, the sweeping product changes being demanded, and a coordinated multi-state legal campaign showing no sign of slowing regardless of how this case ends in October.
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Disclosure: None. This article is originally published at Insider Monkey.
