Meta’s Major Court Loss Could Lead to Costs Exceeding $375 Million

New Mexico Attorney General Raúl Torrez achieved a groundbreaking victory earlier this year, securing $375 million in a significant child safety case against Meta. However, the next phase of this battle could have even greater implications for Meta and the entire social media landscape.

Starting Monday, legal representatives for Meta and New Mexico will convene in a Santa Fe courthouse for a three-week trial focused on public nuisance claims. The AG is pushing for the court to mandate changes to Facebook, Instagram, and WhatsApp, including implementing age verification for users in New Mexico, banning end-to-end encryption for those under 18, limiting their usage to 90 hours per month, restricting features that enhance engagement like infinite scroll and autoplay, and requiring Meta to identify 99 percent of new child sexual abuse material (CSAM).

“Our aim from the beginning has been to transform how the company operates,” Torrez stated during a recent trip to Washington, DC, where he advocated for new legislation aimed at protecting children online. “Even with a $375 million judgment, for a company of this size and profitability, it’s likely not enough to change their business practices. Some within the company might even view it as just a cost of doing business.”

While any judicial orders would specifically affect Meta’s operations in New Mexico, the company might choose to implement these changes in other states for simplicity. Alternatively, it has hinted at the possibility of withdrawing its services from New Mexico altogether. A court ruling could also signal to other tech firms that legal consequences may lead to significant operational changes.

During the trial, New Mexico will argue that Meta has become a public nuisance by posing a public health risk in the state. The AG’s office plans to call around 15 witnesses, including experts who will discuss the feasibility of the proposed changes and individuals who will testify about the harms allegedly caused by Meta. After Meta presents its defense, Judge Bryan Biedscheid will assess which proposals are relevant and practical, a process that may take longer than the swift jury verdict delivered in March.

A decisive victory for New Mexico could invigorate Torrez and many other plaintiffs currently pursuing legal action against tech companies. Conversely, a limited ruling could be a significant setback. While the outcome won’t directly affect other cases, it will likely influence negotiations for potential settlements.

Several of Torrez’s proposals touch on contentious tech policy issues. Age verification would likely necessitate Meta or a third-party service to gather more personal information from both adults and minors, raising concerns from privacy advocates about user safety. Don McGowan, a former board member of the National Center for Missing and Exploited Children (NCMEC), warned that restricting encrypted communications on platforms like Facebook could drive users to less secure alternatives.

The proposed changes may not significantly alter certain aspects of Meta’s business; the company recently announced it would eliminate end-to-end encryption on Instagram, claiming that “very few people” utilized that feature.

Peter Chapman, associate director of the Knight-Georgetown Institute, noted that prohibiting encryption could lead to “significant tradeoffs,” and other adjustments might be more effective. For instance, evidence presented by the state indicated that Meta’s own profile recommendations were connecting adults with minors, a feature that poses a clear risk without substantial benefits, which Torrez is also seeking to eliminate. “There’s an opportunity to intervene at that level to prevent harmful interactions without addressing encryption directly,” Chapman explained.

No single change is likely to resolve the broader issues of child and teen safety, Chapman added, which is why Torrez’s request for multiple layers of changes is noteworthy. However, the effectiveness of any remedy will depend on its implementation and oversight. For example, how will Meta measure its claimed 99 percent detection rate of new CSAM? What methodology will it use to account for what it fails to detect? The same questions apply to the accuracy and reliability of any mandated age verification.

Meta has raised concerns about these potential challenges in its defense against Torrez’s proposals. “No matter where the accuracy threshold is set, Meta would never be able to demonstrate that the system met that standard, as doing so would require detecting 100% of CSAM to establish a baseline,” the company stated in a legal filing. Torrez’s chief deputy, James Grayson, mentioned in a press call that the court and an appointed independent monitor would have some discretion in tracking; however, the identity of this monitor has yet to be determined.

Meta and other groups opposing the AG’s approach argue that the outcomes he seeks could be counterproductive. “The demands being made in New Mexico are misguided and could expose users to other forms of exploitation,” said Maureen Flatley, president of Stop Child Predators, a group advocating for increased funding for the enforcement of laws against child predators, which has received support from a Meta-backed trade group. “To hold platforms accountable for all these issues would be akin to telling the US Bankers Association that they are responsible for all bank robberies, which is absurd.”

“The New Mexico Attorney General’s focus on a single platform is a flawed strategy that overlooks the multitude of other apps teens use daily,” stated Meta spokesperson Chris Sgro. “The proposed mandates infringe on parental rights and restrict free expression for all New Mexicans. Nevertheless, we remain dedicated to providing safe, age-appropriate experiences and have already implemented many of the protections the state is seeking, including 13 safety measures this past year.”

Torrez is also targeting the broader tech industry. He recently visited Washington, DC, to advocate for new online protections for children and a revision of Section 230, the law that shields tech platforms from liability for user-generated content. “While we succeeded in our district court in Santa Fe, I believe the current law creates significant ambiguity,” he remarked during his visit. “If Section 230 were not a shield for these companies, it would increase the likelihood that they would have to present their case to a jury.”

Chapman noted that using lawsuits as a means of regulation is not an unusual occurrence in the US. “Whether it’s tobacco, opioids, or e-cigarettes, there’s a precedent for legal action influencing broader policy discussions.”