Meta to pay U.S. states up to $16.7 billion and limit teenagers’ time on Instagram

Meta has agreed to pay U.S. states up to $16.7 billion and overhaul the way Facebook and Instagram operate to settle a lawsuit alleging that its apps deliberately made children addicted. Judge Yvonne Gonzalez Rogers approved the agreement on August 26, midway through the second week of proceedings in federal court in Oakland, which were scheduled to continue until October.

The lawsuit was brought by the attorneys general of California, Colorado, Kentucky and New Jersey, and the agreement resolves the claims of 51 plaintiffs. The states argued that Meta knew about the risks posed by its platforms but did not disclose them publicly, and also collected data from children under 13. The company denies the allegations and has admitted no wrongdoing.

In addition to paying money, Meta will change the apps themselves. Users under 18 will be subject by default to a two-hour daily limit, a block from midnight to 6 a.m. and disabled notifications during school hours — only a parent can remove these settings. Teenagers will no longer see the number of likes and reactions on their posts, filters that mimic plastic surgery will be banned, and they will be able to choose a feed without algorithmic recommendations.

The states will direct part of the payments to adolescent mental health programs, extracurricular activities and crisis-support services. An independent monitor will oversee compliance, while a separate court injunction bars Meta from making misleading statements about its safety features.

At the same time, Meta published an open letter to TikTok and YouTube urging them to adopt the same rules: about $5 billion of the total amount takes effect only if the competitors also agree to an hourly limit, overnight restrictions and age verification. The logic is simple: if teenagers are restricted in one app, they will move to another.

The scale of the deal should not be overestimated, however. In the current quarter, Meta will write off $10 billion in connection with the settlement, while a jury verdict could have cost it dozens of times more, which is why its shares rose slightly after the news. The agreement also does not resolve thousands of separate cases against social media companies.