Meta to pay US states up to $16.7 billion and limit teenagers’ time on Instagram

Meta has agreed to pay US states up to $16.7 billion and redesign how Facebook and Instagram operate to settle a lawsuit alleging that its apps deliberately made children dependent on them. Judge Yvonne Gonzalez Rogers approved the agreement on August 26 — midway through the second week of proceedings in a federal court in Oakland that 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 alleged 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 not admitted liability.

In addition to paying money, Meta will change the apps themselves. Users under 18 will have a default limit of 2 hours per day, a block from midnight to 6 a.m. and notifications turned off 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 imitate plastic surgery will be banned, and they will be able to choose a feed without algorithmic recommendations.

Some of the payments will be directed by the states to adolescent mental-health programs, extracurricular activities and crisis-support services. An independent auditor will oversee compliance, while a separate court order prohibits 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: around $5 billion of the total amount will take effect only if competitors also agree to an hourly limit, nighttime restrictions and age verification. The logic is simple: if a teenager is 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 for the settlement, while a jury verdict could have cost tens of times more, so its shares edged up after the news. The agreement also does not resolve thousands of separate cases against social media companies.