Meta ordered to pay $375m in New Mexico trial over child exploitation

NEW YORK, Mar 25 (Reuters): A New Mexico jury on Tuesday found Meta Platforms violated state law in a lawsuit brought by the state attorney general, who accused the company of misleading users about the safety of Facebook, Instagram and WhatsApp and of enabling child sexual exploitation on those platforms.
After deliberating less than a day, the jury found that Meta violated New Mexico's consumer protection law and ordered the company to pay $375 million in civil penalties.
The verdict marks the first time a jury has ruled on such claims against Meta, as the company faces a wave of lawsuits over how its platforms affect young people's mental health.
"We respectfully disagree with the verdict and will appeal," a Meta spokesperson said in a statement. "We work hard to keep people safe on our platforms and are clear about the challenges of identifying and removing bad actors or harmful content."
In a statement, New Mexico Attorney General Raúl Torrez, a Democrat, called the verdict "a historic victory for every child and family who has paid the price for Meta's choice to put profits over kids' safety."
"The substantial damages the jury ordered Meta to pay should send a clear message to big tech executives that no company is beyond the reach of the law," he said.
In a second phase of the trial in May, Torrez said his office will ask the court to order Meta to make changes to its platforms to protect children and to impose additional financial penalties.
Meta shares were up 0.8 per cent in after-hours trade following the verdict. The state had asked the jury to award more than $2 billion in damages.
The jury's decision capped a six-week trial in Santa Fe. Torrez had accused the company of allowing predators unfettered access to underage users and connecting them with victims, often leading to real-world abuse and human trafficking.
"Over the course of a decade, Meta has failed over and over again to act honestly and transparently," Linda Singer, an attorney for the state, told the jury during closing arguments on Monday. "It's failed to act to protect young people in this state."
Meta denied the allegations, saying it has extensive safeguards in place to protect younger users.
"What the evidence shows is Meta's robust disclosures and tireless efforts to prevent harmful content. And these disclosures mean that Meta did not knowingly and intentionally lie to the public," Kevin Huff, an attorney for Meta, told the jury on Monday. Reuters viewed the trial on Courtroom View Network.
Meta has come under increasing scrutiny in recent years over its handling of child and teen safety, spurred in part by whistleblower testimony before Congress in 2021 that alleged the company knew its products could be harmful but refused to act.
Separately, Meta is facing thousands of lawsuits accusing it and other social media companies of intentionally designing their products to be addictive to young people, leading to a nationwide mental health crisis. Some of the lawsuits, which have been filed in both state and federal courts, seek damages in the tens of billions of dollars, according to Meta's filings with financial regulators.
Meanwhile, Meta Platforms has offered top executives stock options that could pay out hundreds of millions of dollars and are tied to lifting its valuation six-fold to more than $9 trillion, in a bid to retain talent and spur aggressive growth in the AI era.
The options are the social media giant's first for its top brass and require steep stock milestones. They suggest Big Tech is rethinking incentives as it pours hundreds of billions of dollars into data centres and departs from its long-standing reluctance to raise debt to gain an edge in the AI race.
A more than six-fold jump would be needed to unlock the most aggressive tranche, requiring the company's shares to rise as high as $3,727.12, regulatory filings late on Tuesday showed.
At that level, Meta would have a market value of more than $9 trillion, much higher than Nvidia - currently the world's most valuable company with a valuation of $4.257 trillion.
Meta must meet the price targets by February 14, 2028, for the options to vest. If unsuccessful, Meta executives' unvested options would become available to them in installments through August 15, 2030. The options will expire in March 2031 if they are unexercised.