Meta, the parent company of Facebook, Instagram and WhatsApp, has been ordered to pay $25bn (£18.6bn) after a New Mexico court found that the technology giant had repeatedly misled the public about how it handled users’ personal data.
The ruling, delivered by Judge Francis Mathew on Wednesday, followed a two-week trial earlier this year. The judge said Meta’s alleged deception extended beyond its data practices and went to the heart of the company’s business operations.
Meta’s head lawyer, CJ Mahoney, said the decision made it “all but impossible to do business in the state of New Mexico”. The company intends to appeal, with Mahoney expressing confidence that the appeal would succeed.
The penalty is the largest fine imposed on Meta to date and comes amid a series of legal challenges facing the company over data privacy and child safety.
Cambridge Analytica scandal at the centre of the case
The lawsuit originated from the Cambridge Analytica scandal, in which a political consulting firm obtained information from millions of Facebook users. The data was used in political consulting, including work connected to Donald Trump’s successful 2016 US presidential campaign.
New Mexico prosecutors argued that Meta executives had repeatedly assured users that their personal information was not shared with or accessed by third parties without permission, despite evidence that this had occurred.
The state also accused the company of misleading the public about how it benefited from content containing hate speech and how its policies against such material were enforced.
The jury found that Meta had intentionally misled the public on both issues.
According to the state’s legal team, the company’s conduct affected the entire population of New Mexico, estimated at about two million people. The jury found that Meta had violated state laws more than 40 million times.
Judge Mathew said the violations and misrepresentations were deliberate and had continued for more than 11 years, from 2010 to 2021. He also wrote that communications involving senior executives, including chief executive Mark Zuckerberg, had been designed to mislead the public.
Although the full penalty calculated from thousands of violations reached $219bn, the judge reduced the amount to $25bn.
The state had sought fines of up to $40bn, while Meta argued that any penalty exceeding $3.4bn would be unconstitutional.
Meta plans to challenge the ruling
Meta disputes the allegations and argues that the lawsuit threatens freedom of expression online.
“At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online,” Mahoney said.
New Mexico Attorney General Raúl Torrez welcomed the decision, saying powerful technology companies should not be able to operate beyond the reach of the law because of their size and influence.
“Today’s result makes clear that no corporation is too powerful to be held accountable,” he said.
The case follows a $5bn penalty imposed on Facebook by the US Federal Trade Commission in 2019 over its data privacy practices.
New Mexico has also pursued a separate case against Meta over the safety of its platforms for children. Earlier this year, the state fined the company nearly $1bn for allegedly misleading the public about child safety.
In that case, the judge compared the company to an industrial polluter, describing the harm associated with its platforms as a form of pollution involving psychological damage and the sexual exploitation of children.
Meta continues to invest heavily in artificial intelligence
Despite the mounting legal costs, Meta is committing enormous sums to artificial intelligence as it seeks to compete with other major technology companies.
The company expects to spend at least $135bn this year, with the figure potentially reaching $145bn, largely on AI-related projects and infrastructure.
During a call with financial analysts, Zuckerberg said Meta’s consumer-focused AI tool, Muse, was already being used by 10 million people.
“Growing Muse to serve billions of people is both our mission and our strategy,” he said.
The scale of Meta’s investment has put pressure on its cash flow. A BBC review of the company’s past financial documents found that Meta reported negative cash flow of more than $2bn, apparently the first time this had happened since it became publicly listed 14 years ago.
Negative cash flow means the company is spending more on operations and investments than it retains over the relevant period, even when its underlying business remains profitable.
Meta’s revenue rose by 26% between July and September compared with the same period a year earlier, reaching $64.5bn. Its profits also tripled to $9.8bn.
The company nevertheless plans to continue increasing its AI spending.
Chief financial officer Susan Li announced a stock split during the financial call, under which existing shareholders would receive an additional class of non-voting shares. She said the new shares were not intended for one specific investment but pointed to the continuing costs associated with AI and the possibility of needing greater funding flexibility next year.
A growing legal and financial challenge
The $25bn ruling adds to Meta’s growing list of legal disputes at a time when the company is investing aggressively in AI and expanding its technology infrastructure.
Although the company remains highly profitable, the case highlights the potential financial consequences of long-running disputes over user privacy, platform safety and corporate accountability.
Meta’s planned appeal means the legal battle is not necessarily over. However, the decision marks a significant setback for the company and reinforces the scrutiny facing major technology firms over how they collect, use and protect personal information.
