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A court in the US state of New Mexico has ordered Meta, the parent company of Facebook, Instagram and WhatsApp, to pay a $25 billion fine for misleading users about the use of their personal data.
Judge Francis Mathew issued the order on Wednesday following a two-week trial that found Meta had misled the public about its handling of users’ information for years.
Meta said it would appeal the ruling. The company’s chief legal officer, CJ Mahoney, said the decision would make it nearly impossible for Meta to operate in New Mexico and would not withstand an appeal.
The penalty is the largest fine ever imposed on Meta, which faces lawsuits in several US states over data privacy and child safety.
In California, the company has been accused of harming children through Facebook and Instagram. Meta has reached an $8 billion settlement to resolve those allegations.
The New Mexico case is linked to the Cambridge Analytica scandal, which came to light in 2018. The political consultancy had used data from millions of Facebook users, including in activities connected to the 2016 US presidential election, which Donald Trump won for the first time.
The lawsuit alleged that Meta executives repeatedly claimed that third parties were not allowed to use users’ data without their consent, despite evidence to the contrary. The company was also accused of misleading the public about how it profited from hateful content and enforced its policies to control such material. The jury found Meta liable on these allegations as well.
Lawyers for New Mexico argued that Meta’s dishonesty over its handling of users’ information had harmed nearly two million residents of the state. The jury found that the company had violated state law more than four million times.
New Mexico Attorney General Raúl Torrez said powerful technology companies had long behaved as though their size and influence placed them above the law.
“This verdict proves that no company is beyond accountability,” he said.
State lawyers had sought penalties of up to $40 billion, while Meta argued that any fine exceeding $3.4 billion would be unconstitutional. Judge Mathew reduced a calculated total of $219 billion, based on thousands of alleged violations, to $25 billion.
The judge’s order said Meta had deliberately misrepresented how it used and shared users’ data for more than 11 years, from 2010 to 2021. Communications among senior executives, including Mark Zuckerberg, were also cited as evidence of efforts to mislead the public.
In 2019, the US Federal Trade Commission fined Meta $5 billion for failing to protect users’ privacy.
New Mexico has also pursued a separate case against Meta over child safety. Earlier this year, the company was fined nearly $1 billion for misleading the public about the safety of social media for children. In that case, the judge compared Meta’s conduct to that of polluting industries, describing the form of “pollution” as “harm to children’s mental health and their sexual exploitation”.
Despite the massive penalties, Meta is continuing to invest heavily in infrastructure and technology to remain competitive in artificial intelligence (AI).
Speaking to financial analysts, Zuckerberg said Meta’s consumer-facing AI tool, Muse, already had 10 million users. He said the company wanted to develop Muse into a platform capable of benefiting hundreds of millions of people.
Meta plans to spend at least $135 billion on AI projects this year, with the figure potentially reaching $145 billion.
According to a BBC analysis, the company’s heavy AI investment has pushed its cash flow more than $2 billion into negative territory.
This may be the first time this has happened since Meta went public 14 years ago. Cash flow refers to the money remaining after operating expenses and investments. In other words, despite rising revenue, Meta is currently spending more money than it generates.
Meta’s revenue rose 26% year-on-year to $64.5 billion between July and September. Its profit tripled to $9.8 billion during the same period.
The company is also planning additional investment. During the discussion with analysts, Chief Financial Officer Susan Li announced plans to introduce a new class of shares that would give existing shareholders additional shares without voting rights.
Li said the new shares were not being introduced to fund any specific investment.
However, referring to Meta’s ongoing AI spending, she said the company might need greater financing flexibility next year.