A $25 Billion Fine Against Meta Raises the Question of What Would Actually Force Change

A New Mexico judge ordered Meta this week to pay $25 billion for violating state consumer protection law, the largest fine the company has faced. The size of the penalty has prompted a pointed question: is it big enough for Meta to feel it?

The state filed the case in 2021, alleging that Meta broke New Mexico's Unfair Practices Act by misleading users about how it handled their data, in a dispute tracing back to the Cambridge Analytica scandal. The attorney general later added claims about the company's content moderation policies. A jury sided with the state in September, and the multibillion-dollar penalty followed.

Meta has said it will fight the outcome. C.J. Mahoney, its chief legal officer, said the ruling and the attorney general's approach to enforcement make it "all but impossible to do business in the state of New Mexico." He described the lawsuit as an attempt to "impose a tax on speech" and said the company is "confident we will prevail on appeal."

The fine is one of many legal setbacks for Meta this year. Earlier, a New Mexico jury found that the company should pay $375 million for violating the same law in a trial tied to child safety, and a second phase of that case produced a $567 million order. A Los Angeles County superior court found Meta and Google-owned YouTube liable for harming a young woman's mental health through addictive app design, awarding her $6 million, most of which Meta must cover. In August, Meta also settled a federal case brought by most US states over features alleged to harm children, agreeing to pay between $17 billion and $18 billion over 10 years.

Even so, the sums remain small against the company's size. Reuters reported that New Mexico's attorneys originally asked Judge Francis Mathew for $35 billion to $45 billion. The maximum possible penalty was $219 billion, calculated at $5,000 for each of 43 million violations, which the judge reduced to $25 billion. Meta is currently valued at around $1.7 trillion. Its shares fell on Thursday, but that drop reflected a mix of factors, including its earnings report, heavy AI spending and a broader slide in AI stocks.

Legal experts say that without a financial blow, change would likely require several pressures building together. Meta faces a perception problem, with juries ruling against it, protesters targeting it and its own employees speaking out about internal policies. Corban Rhodes, a partner at DiCello Levitt, the firm representing New Mexico, noted that each case Meta declines to settle puts trial evidence before the public and into future litigation. The New Mexico trial placed more than 100 exhibits on the public record, he said, material that had been kept secret for over a decade.

One exhibit is a 2018 email from then-COO Sheryl Sandberg, sent days after the Cambridge Analytica scandal broke. She wrote that the biggest issue was that "there were a MILLION developers with access to the data," and warned of "many, many, many more moments like this in the next month and year."

Insurers may also become a source of pressure. In March, a Delaware judge ruled that insurers have no duty to defend Meta against the thousands of lawsuits it faces. Some experts argue that insurers could become a de facto form of AI governance by making responsible design a condition of coverage.

Brian Quinn, a Boston College law professor who studies corporate law, said the sharpest pressure could come if shareholders and board members begin focusing on individual directors and officers rather than on the company as a whole. Under current indemnification law, he said, a finding that someone violated the law does not automatically make them liable if they are believed to have acted in good faith. But if the same people keep appearing in the same set of facts, he said, shareholders might demand that the company stop indemnifying them. That would leave Meta's executives less protected.

Meta's legal troubles are unlikely to end soon, and the company is not expected to collapse from penalties alone. Rhodes said regulators and courts have focused on the effects of earlier social media eras, and expects the next wave of litigation to center on AI.