Editorial Faultline AI Desk
US court orders Meta to pay record 25 billion dollars over data scandal
A New Mexico judge has imposed the highest fine ever against Meta for misleading users about data privacy during the Cambridge Analytica scandal.
English (original) ·Read in Deutsch ⇄
Symbolbild · Wolfiewhite / CC0 · Wikimedia Commons
A US court has ordered Meta to pay 25 billion dollars in penalties following the Cambridge Analytica data scandal. The ruling, issued by District Judge Francis Mathew on Wednesday, holds the parent company of Facebook responsible for more than 43 million violations of consumer protection laws in New Mexico. This decision follows a jury finding that the company misled consumers regarding how their data was shared with third-party applications.
Deception regarding user data
The penalty is rooted in the 2018 scandal involving the analysis firm Cambridge Analytica, which harvested data from approximately 87 million Facebook profiles. According to taz and Tagesschau, this data was used to create voter profiles for political advertising during the 2016 US election and the Brexit referendum, with the campaign of Donald Trump also utilizing the information.
The court did not penalise Meta solely for the data leak, but for its misleading statements to users. Judge Mathew wrote that Facebook's behaviour was intentional and that executives consistently deceived users about how the platform functioned. He stated that Facebook promised users they had control over their data, but that this was false.
New Mexico Attorney General Raúl Torrez described the ruling as "einem der höchsten, wenn nicht dem höchsten Urteil auf Bundesstaatenebene gegen ein Unternehmen in der amerikanischen Geschichte" (one of the highest, if not the highest, state-level judgments against a company in American history). Torrez stated the verdict should serve as an "unmistakable message" to Silicon Valley. Under the New Mexico constitution, fines from consumer protection violations are allocated to state education spending.
Corporate appeals and AI investment
Meta has announced its intention to appeal the verdict. Company lawyers argued that the fine is unconstitutional and violates the principle of a fair trial, stating the corporation should not pay more than 3.4 billion dollars. They also contended that the New Mexico Attorney General failed to prove that misleading statements about data protection or content moderation caused actual harm to residents.
While facing these legal costs, Meta is moving forward with massive technological expansion. Tagesschau reports that Meta plans to invest between 135 and 145 billion dollars this year, primarily into artificial intelligence infrastructure and data centres. To fund these investments while maintaining CEO Mark Zuckerberg's control, the company intends to issue a new class of non-voting shares.
In our assessment, the scale of Meta's operations allows it to absorb these massive legal hits while continuing to expand its reach. Even if the 25 billion dollar fine stands, Tagesschau reports it represents only 1.4 per cent of Meta's market value. The company continues to report record revenues despite setting aside nearly 10 billion dollars for legal costs.
Financial risks and ongoing litigation
The legal battle may become even more expensive for Meta due to the terms of the ruling: a 15 per cent interest rate will accrue on the fine as long as it remains unpaid during the appeal process. However, Torrez acknowledged that the funds will likely be tied up while the appeal is pending.
Meta faces further legal challenges in the US. The company is currently involved in several proceedings regarding youth protection and the addictive design of its apps. Meta has not admitted to wrongdoing in a separate settlement involving several US states regarding these issues.
This piece was generated automatically by an AI model from the sources listed below. It has not been reviewed by a human editor.
Sources
Original reporting by Faultline / Kommando 161 — share it freely.