Meta slapped with $25 billion fine in New Mexico over Facebook data practices, company plans appeal

Meta, the parent company of Facebook, Instagram and WhatsApp, has been ordered to pay $25 billion in New Mexico after a judge ruled that the technology giant repeatedly misled the public about its handling of Facebook users' personal data. The ruling, delivered on Wednesday following a two-week trial earlier this year, marks the largest fine ever imposed on Meta over its business practices.

"The lies extend beyond Facebook's data practices as well," the judge said, adding they went to the heart of Facebook's core business practices. Meta's chief lawyer, CJ Mahoney, criticised the decision, arguing that the penalty would severely restrict the company's ability to operate in the state. Mahoney said the ruling made it all but impossible to do business in the state of New Mexico. The company intends to appeal, a move Mahoney said will be successful.

Cambridge Analytica scandal at the centre of the lawsuit

The New Mexico lawsuit originated from concerns over Facebook's handling of user information and the Cambridge Analytica scandal, which exposed how personal data from millions of Facebook users was used for political consulting. Cambridge Analytica obtained information from Facebook users and incorporated it into its political consulting work, including activities connected to the 2016 US presidential election, which resulted in Donald Trump winning his first term.

New Mexico officials argued that Meta, which was still operating under the Facebook name when some of the events occurred, had repeatedly misrepresented how it collected, shared and protected users' personal information. The state also accused the company of misleading the public about how it benefited from content containing hate speech and how its rules against such material were enforced. The jury found that Meta had intentionally misled the public on those claims as well. Meta rejected the allegations, arguing that the lawsuit threatened 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 added.

Also Read: US midterms: Democrats sue Trump administration over alleged 'threats and intimidation' ahead of election, Musk issues warning to Dems

Jury finds millions of violations of state law

Lawyers representing New Mexico challenged statements made by Meta executives over several years, particularly assurances that users' personal information was not shared with or accessed by third parties without their consent. The state argued that the company's conduct affected the entire population of New Mexico, which has approximately two million residents.

A jury found that Meta had violated state laws more than 40 million times, providing the basis for the substantial financial penalty. New Mexico Attorney General Raúl Torrez said the verdict demonstrated that large technology companies could be held accountable for their actions. "For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law," New Mexico Attorney General Raúl Torrez said on Wednesday. “Today's result makes clear that no corporation is too powerful to be held accountable.” State lawyers had sought penalties of up to $40 billion. Meta, meanwhile, argued that any fine exceeding $3.4 billion would be unconstitutional.

Judge cites more than a decade of misconduct

Judge Francis Mathew issued a forceful ruling on Wednesday, setting the penalty at $25 billion, an amount broadly comparable to Meta's profits in a single quarter. In his decision, the judge said the company's violations and misrepresentations about the use and sharing of Facebook users' data were willful and continued for more than 11 years, covering the period from 2010 to 2021.

The judge also cited internal communications involving senior executives, including Meta chief executive Mark Zuckerberg. Communications between senior executives, including Mark Zuckerberg, were designed to mislead the public, Judge Mathew wrote in his order. Although the total potential penalty calculated from thousands of alleged violations of state law reached $219 billion, the judge reduced the amount to $25 billion.

Meta faces additional legal pressure over data privacy and child safety

The New Mexico ruling follows a $5 billion penalty imposed by the US Federal Trade Commission in 2019 over Facebook's data privacy practices. New Mexico has also pursued separate legal action against Meta over the safety of its social media platforms for children. Earlier this year, the state fined the company almost $1 billion for allegedly misleading the public about the safety of its platforms for young users.

In that separate case, the judge overseeing the proceedings compared Meta to an industrial polluter, describing the company's alleged harm to children as the psychological harm and sexual exploitation of children. California and several other states have also brought lawsuits against Meta over comparable concerns, including the impact of its platforms on young users. Those states reached a settlement with the company just days after a trial began that had been expected to last several weeks.

Meta plans to appeal the record fine

Meta intends to challenge the $25 billion ruling, setting up a potentially lengthy legal battle over the extent of its responsibility for misleading statements and alleged violations of state law.