Of the thousands of lawsuits Meta faces over children’s safety on its platforms, none may be more important or decisive than one that goes to trial this week in California.

The jurisdictions are seeking massive financial compensation that could theoretically reach up to $1.4 trillion, as well as radical changes to how the company operates Facebook and Instagram.

The lawsuit accuses the social media giant of contributing to a mental health crisis among young people by deliberately designing features that make children addicted to its platforms. It also alleges that Meta regularly collects data on children under the age of 13 without parental consent, in violation of federal law.

“Meta has used powerful and unprecedented technologies to lure, engage, and ultimately ensnare young people,” the lawsuit states. “Its motive is profit, and its pursuit of that motive has...”

Dozens of states filed this lawsuit three years ago. The trial set to begin on Tuesday in a federal court in Oakland, California includes four states as plaintiffs: California, Kentucky, Colorado, and New Jersey. It is expected that the other 25 states will have subsequent trials.

For its part, a statement from Meta said that it rejects these allegations, confirming that the trial evidence will show its commitment to supporting youth. The company added: “We have listened to parents, worked with experts and law enforcement, and conducted in-depth research to understand the most important issues.”

States seek a strong blow against Meta

For Meta, which has already lost two landmark cases concerning harm to children and teenagers this year, the stakes seem very high. The company announced last month a rare drop in its profits, partly due to legal costs of $2.4 billion.

The figure of $1.4 trillion – disclosed by Meta in a legal filing – is close to the total market capitalization of the company based in Menlo Park, California, which is the value of all its issued shares on the stock exchange. Paying this amount would inevitably lead to the bankruptcy of Meta’s platforms and possibly put the company under state ownership.

In this context, Eric Goldman, a professor and director of the High Tech Law Institute at Santa Clara University School of Law said: “The states’ attorneys general are seeking maximum gain. They are trying to establish definitive precedents in this case, they have demanded extraordinary compensation and seek to impose extraordinary structural measures if successful.”

For its part, Meta described the potential penalty as “unrelated to any violation alleged” by the states.

In a filing submitted on July 6 to the US Court of Appeals for the Northern District of California, Meta said: “A penalty of this magnitude is unprecedented in the history of consumer protection enforcement.”

If Meta loses the case, the court will have wide discretion over the size of any fine. Legal experts say that imposing a sum close to $1.4 trillion seems highly unlikely.

James Greemanman, a law professor at Cornell Law School and Cornell Tech said: “It’s unreasonable in the sense that Meta doesn’t have this money and can’t get it. A judgment of this magnitude would push Meta toward bankruptcy, wipe out its shareholders, and effectively make the state own the company.”

Greemanman added that in practice, “it seems highly unlikely to happen.”

He noted that in other cases with potentially high damages for multiple individual violations, courts have stopped short of imposing maximum penalties. For example, in the Anthropic AI training case, plaintiffs sought $150,000 in damages for each book the company copied, but the penalty ended up at $3,000 per book, totaling around $1.5 billion.

Privacy Law

This week’s federal trial is more complex than a previous one held earlier this year in Los Angeles, where a state court awarded $6 million to a plaintiff against Meta and Google’s YouTube, a young woman who testified about her social media addiction since childhood.

That case was an example of a bellwether trial selected from thousands of similar civil cases to give both plaintiffs and defendants an idea of how the court would rule on their arguments. The jury found that Meta and YouTube were negligent in designing or operating their platforms, and that this negligence was a major factor in harming the plaintiff. They also determined that each company knew its platform could be dangerous when used by minors and failed to warn adequately about that risk.

In contrast, the state’s lead attorney represents the plaintiffs in the Oakland case, which revolves around state and federal laws that states allege Meta violated, specifying potential penalties for each violation.

“There are a lot of these violations because there are four different states and at least three types of laws: There is the Children’s Privacy Law, the False Advertising Law, and Unfair Competition Laws,” said Rebecca Allensworth, a law professor at Vanderbilt University School of Law.

Meta adds security tools, but states demand more

A ruling that leads to changes in how Facebook and Instagram operate could be as important as any potential financial penalty.

In recent years, Meta has introduced a range of new features designed to protect minors. In 2024, the company launched teenage accounts on Instagram, which are virtually private and come with restrictions on messaging and content, as well as parental control tools. The company also uses artificial intelligence technologies to determine whether children under the age of 13 are using Instagram or if teenagers are lying about their ages to access adult-only accounts.

Mental health crisis

For their part, safety activists have called on the company to make further efforts. A judge in New Mexico issued an order earlier this month mandating new security measures for platforms, including time limits for minors, restrictions on AI-powered chatbots, and mandatory warnings on the platforms. However, his order was limited to users within the state only.

“These prosecutors have a real opportunity to fix the product,” Laura Marquez-Garrett of the Center for Social Media Victims said on Friday in a virtual discussion organized by activists through the Tech Oversight Project. “For these companies, this is a real reckoning moment. As these cases move forward, we’re going to see an enormous step forward, friends, not just a normal step.”

During jury selection last week, prospective jurors were asked whether they believed Meta contributed to the mental health crisis among young people and to what extent. While many agreed that it did, they also placed some of the blame on parents, noting that other issues like climate change and the state of the world at large are contributing factors to children’s and teens’ mental health problems.