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While Meta denies the allegations, the potential consequences of this case could be significant for the company, which is already facing low employee morale, waves of layoffs and a series of lagging investments.
At the time of the March penalty, financial services firm Morningstar said it was not overly concerned about the impact of the looming court cases on Meta’s valuation, even if governments around the world use these cases as a reason to push for structural changes to the business.
While no one can predict which way the coalition case will go, Meta’s problems extend to concerns about significant financial exposure in some of its investments and business units.
Meta has also ramped up spending to build out AI infrastructure as growing concerns about an AI bubble loom over the sector.
Meta itself is worried about the financial strain. “There can be no assurances that a favorable final outcome will be obtained in all our cases, and defending any lawsuit is costly and can impose a significant burden on management and employees,” the company said in a January Securities and Exchange Commission (SEC) filing.
Can the lawsuit impact its core product.
The lawsuit calls for changes to its business model, including eliminating the infinite scroll that allows users to continually look at new posts. Meta’s advertising business is dependent on impressions, or the number of times a content appears on a user’s screen.
The longer someone is on the app, the more impressions they can see.
In 2025, Meta reported 12 percent more advertisement impressions than in 2024, while the average price per advertisement jumped by 9 percent.
The plaintiff states want the company to make other changes, including getting rid of algorithms and AI models made from data compiled from minors. The states are also asking the court to compel the company to promote the wellbeing of its users and set time restrictions for its youngest consumers.
But the lawsuit says that is not enough, alleging that teens could easily dismiss the notification and continue scrolling.
How will this impact future lawsuits.
Meta is currently facing lawsuits from more than 100,000 different parties, according to its SEC filings, including individuals, cities, states, and school districts around the US.
Lovell predicted that, ultimately, there will be a combined settlement.
Snap, TikTok, and Google’s YouTube have also faced litigation amid allegations that their products are built to encourage compulsive use by young people, Tomic told Al Jazeera.
The claims could open the floodgates to the type of litigation that challenged the tobacco industry in the late 1990s, he said.
In 1998, 46 states settled lawsuits with major cigarette makers over health costs and forced the companies to impose restrictions on advertising, especially targeting younger audiences.
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Informação baseada em material público de Al Jazeera, reescrito pela redação ULTRA NOTÍCIAS.
