Meta reportedly discussing a mid-trial settlement as the case by 29 state attorneys general enters its second week

Mark Zuckerberg's Meta Platforms, which is now in the second week of a trial brought by state attorneys general, has possibly discussed a mid-trial settlement in a case that accuses the company of deliberately designing its apps, including Facebook and Instagram, to addict teens, Bloomberg reported, citing sources.

The trial, taking place in a federal court in Oakland, California, presents a significant risk for the company as the state attorneys general of 29 states are seeking huge financial penalties on behalf of the public and sweeping changes to how the platforms operate.

The states have accused the company of violating state consumer protection laws and federal privacy rules, potentially exposing it to substantial fines that could quickly mount given the millions of young people using Instagram and Facebook.

While the company has denied the allegations and accused the states' top officials of seeking unreasonable design changes and an "outlandish payout," it estimates that losing the ongoing trial could leave Meta facing penalties of up to $1.4 trillion, an amount close to its market capitalisation and unprecedented in legal history. On the contrary, a settlement would likely cost the company a far smaller sum.

Instagram chief Adam Mosseri testifies

During the first week of the trial, Instagram chief Adam Mosseri and several other current and former Meta employees testified about their roles in designing its social media platforms and studying how teenagers interact with tools intended to reduce problematic use.

According to a Reuters report, Mosseri told jurors that few teenagers used a crucial safety feature to limit their use before it was turned on by default. He also denied suggestions made by the states that Instagram deliberately stalled by not making the "Take a Break" feature the default setting for teenagers until September 2024, nearly three years after its launch.

Mosseri acknowledged that the percentage of teens using the "Take a Break" feature was in the low single digits before Instagram made it the default.

Additionally, he denied that he asks the company's employees to hide information from him that could pose legal challenges. Mosseri said, "I am not trying to encourage my team to hide anything," and added, "I want to understand how things ‌work. I ⁠can't think of any time that I've encouraged people to bring less information to me."

Instagram's design chief testifies, acknowledges safety data removal

Before Mosseri testified, Francesco Fogu, Instagram's director of product design, testified regarding a presentation on teenagers' safety that his team prepared in 2023 for the company's leadership. He acknowledged the removal of data from a presentation slide indicating that teenage Instagram users encountered 1.5 times more bullying, suicide, hate, nudity, and violent content than adult users.

Meta denied allegations by state attorneys

Earlier this month, the tech giant pushed back against the claims made by state attorneys and termed allegations that it misled users about the safety of its apps and that features of its platforms harmed users "unsubstantiated."

A Meta spokesperson made these remarks to ABC News and said, "The State AGs may call this a landmark case, but their limited claims are unsubstantiated, and their financial demands are vastly disproportionate," adding, "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."

Setback for Meta

The case stems from a lawsuit brought against the company in October 2023 in the Northern District of California by a group of 29 state attorneys general. Four states, namely California, Colorado, New Jersey, and Kentucky, are presenting the case in federal court.

The lawsuit alleges that Meta, which owns platforms such as Facebook, Instagram, and WhatsApp, has "harnessed powerful and unprecedented technologies to entice, engage, and ultimately ensnare youth and teens." It points to features such as infinite scrolling and push notifications, arguing that these tools were developed to keep young users on the platforms for extended periods.

Earlier in August, a New Mexico court also fined Meta $567 million, ruling that the company should make sweeping changes to its applications and arguing that they contributed to a mental health crisis among young people.

However, it remains to be seen whether Meta will finalise a mid-trial settlement with the state attorneys general or complete the trial.

(with agency inputs)