Meta Ordered to Pay $25 Billion in New Mexico Data Privacy Case

A New Mexico judge ordered Meta Platforms to pay $25 billion in damages on Thursday. This penalty represents the largest fine the company has ever faced. The court determined that Meta violated the state's Unfair Practices Act by misleading users about the handling of their personal data.

The legal dispute originated from a lawsuit filed by the state in 2021. The complaint alleged that the company misled consumers regarding data practices, a conflict rooted in the Cambridge Analytica scandal. The state attorney general later expanded the case to include claims about content moderation policies. A jury returned a verdict in favor of the state in September, leading to this multibillion-dollar financial assessment.

Meta has indicated it intends to challenge the ruling. C.J. Mahoney, the company's chief legal officer, stated that the decision and the state's enforcement approach make it "all but impossible to do business in the state of New Mexico." He characterized the lawsuit as an effort to "impose a tax on speech" and expressed confidence that the company will win the case on appeal.

This penalty is one of several major legal losses for Meta this year. A New Mexico jury previously ordered the company to pay $375 million for violating the same consumer protection law in a trial focused on child safety. A second phase of that same case resulted in an additional $567 million order. In a separate matter, a Los Angeles County superior court ruled that Meta and YouTube were liable for harming a young woman's mental health through addictive app design. The court awarded the plaintiff $6 million, the majority of which Meta must cover.

In August, Meta also agreed to settle a federal case brought by most US states. The dispute centered on features alleged to harm children. The settlement requires Meta to pay between $17 billion and $18 billion over a period of 10 years.

Despite these costs, the amounts remain modest relative to the company's valuation. Meta is currently valued at approximately $1.7 trillion. The state originally sought between $35 billion and $45 billion. The theoretical maximum penalty was $219 billion, calculated at $5,000 for each of 43 million alleged violations. Judge Francis Mathew reduced that figure to $25 billion. Meta shares declined on Thursday, though the drop also reflected its earnings report and heavy spending on artificial intelligence.

Legal experts suggest that financial penalties alone may not force structural change. Instead, they argue that multiple pressures must build simultaneously. Meta faces a growing perception problem, evidenced by negative jury verdicts, public protests, and internal employee criticism. Corban Rhodes, a partner at DiCello Levitt, which represents New Mexico, noted that every case Meta declines to settle places trial evidence into the public record. He stated that the New Mexico trial placed more than 100 exhibits on the record, material that had been kept secret for over a decade.

One key exhibit is a 2018 email from Sheryl Sandberg, who was then the company's chief operating officer. She wrote days after the Cambridge Analytica scandal broke that the biggest issue was that "there were a MILLION developers with access to the data." She warned of "many, many, many more moments like this in the next month and year."

Insurers may also exert pressure on the company. In March, a Delaware judge ruled that insurers have no duty to defend Meta against thousands of lawsuits. Some experts argue that insurers could become a form of governance by requiring responsible design as a condition for coverage. Brian Quinn, a law professor at Boston College, noted that shareholders might focus on individual directors rather than the company as a whole. He said that if the same executives keep appearing in similar facts, shareholders might demand that the company stop indemnifying them, leaving executives less protected.

Meta is not expected to collapse from these penalties alone. Rhodes noted that regulators and courts have focused on the effects of earlier social media eras. He expects the next wave of litigation to center on artificial intelligence.