Meta Platforms shares went up early Wednesday after the company reached a proposed settlement in a lawsuit from dozens of states that claimed its social media platforms harmed children. The deal takes away the risk of a much bigger financial penalty, but the industry still faces broader legal risks.
Meta agreed to pay up to $17 billion to the states over 10 years, according to California’s attorney general. The settlement still needs court approval. Meta also agreed to several steps to protect children, such as setting daily time limits on social media use by default, limiting overnight access, making age checks stricter, and hiring an independent auditor to make sure the rules are followed.
Shares went up 3.5% in early trading. Meta did not respond right away to a request for comment.
Attorneys general from California, Colorado, Kentucky, and New Jersey led the case. According to Meta’s earlier estimates, the states could have asked for up to $1.4 trillion in damages, which was almost as much as Meta’s total market value at that time.
The settlement removes the immediate financial threat from this case, but it does not end all legal risks for Meta or the social media industry. There are still questions about how these platforms will handle younger users in the future. Meta and other social media companies also face more lawsuits from teenagers, school districts, and state attorneys general in different places.
