Meta faces ‘astronomical’ stakes as California child privacy trial could change Instagram, Facebook forever

Meta is facing a major legal challenge in California as a coalition of US states accuses the company of designing Facebook and Instagram in ways that encouraged addictive use among children and teenagers.

Opening arguments begin Tuesday (18 August) in Oakland federal court, with California Attorney General Rob Bonta leading the case alongside attorneys general from Colorado, New Jersey and Kentucky. The lawsuit, filed in 2023 by 30 states, alleges violations of federal and state privacy and consumer protection laws, including the Children's Online Privacy Protection Act.

Why California trial could be bigger threat to Meta

The trial follows a significant defeat for Meta in New Mexico, where a jury found the company liable for violating the state's unfair practices law. A judge later ordered Meta to pay $567 million into an abatement fund, following a $375 million jury award.

Meta has said it disagrees with the ruling and plans to appeal.

New Mexico Attorney General Raúl Torrez said the financial consequences of a similar judgment in a much larger state could be dramatically greater.

“This is a state with some 2 million people,” Torrez said. “If you map that same argument onto California or Florida or Texas or New York, I mean, that’s a potentially massive and a market shifting force.”

Torrez described the potential consequences for Meta as “astronomical”, noting the company derives about 98% of its revenue from online advertising.

What changes do states want from Instagram, Facebook?

The states are seeking extensive changes to how Meta's platforms operate for younger users. Their demands include parental verification for teenagers, changes to recommendation algorithms, restrictions on image filters, an end to autoplay and limits on multiple accounts.

They also want Meta to end disappearing posts such as Instagram Stories and remove or change like counts for young users.

The states argue that these features encourage children and teenagers to remain on the platforms for longer and repeatedly return through notifications and personalised recommendations.

The legal strategy focuses on product design and alleged misrepresentations about safety, rather than solely on content posted by users. That could help the states avoid some of the protections provided to technology companies under Section 230 of the Communications Decency Act.

In New Mexico, the court ordered Meta to improve age-assurance tools, make it easier to report suspected underage accounts and develop a system for identifying users under 13.

Meta denies allegations over child safety

Meta has rejected the states' claims and argued that their financial demands are disproportionate.

“The AGs offer no proof anyone in their states was misled, claim benign features like having an additional Instagram account somehow harmed their residents, and attempt to penalize Meta for industry-wide challenges like age verification,” Meta said.

Bonta has argued that Meta knowingly designed a product that could harm young users.

“Meta designed a dangerous product for young users, knew it to be dangerous, and then lied to children, families, and the community about how dangerous it was,” he said. “We are ready to hold Meta accountable for its role in fueling the mental health crisis of American children and look forward to trial.”

Meta has consistently denied those allegations.

“We strongly disagree with these allegations and are confident the evidence will show our longstanding commitment to supporting young people,” a company spokeswoman said.

Meta research under scrutiny

The states have obtained more than 2 million documents from Meta, including internal research examining how engagement features affect young users.

Lawyers have pointed to research suggesting that visible like counts could drive “social comparison”, with users measuring their self-worth against others. The research linked Instagram-driven social comparison to “increased loneliness, worse body image, and negative mood or affect”.

The states are expected to argue that these mechanisms were deliberately designed to maximise engagement among young users.

The case is being heard by US District Judge Yvonne Gonzalez Rogers, who previously presided over the high-profile legal battle involving Elon Musk and OpenAI CEO Sam Altman.

Could Meta be forced to change Instagram and Facebook?

A ruling against Meta could require changes across its platforms, particularly because the states involved represent nearly two-thirds of the US population.

A New Mexico judge has already declared Meta a “public nuisance” and ordered changes including removing like counts for users under 18, restricting the exchange of nude images between teenagers and limiting push notifications at certain hours.

If the California coalition succeeds, similar restrictions could potentially become much broader.