Report from the Wall Street Journal
In Brief – A New Mexico judge has ordered Meta to pay $25 billion to the state after a jury found that the company violated state consumer protection law by misleading users about its data-privacy practices. The jury ruled that Meta deceived users about data privacy, efforts to combat hate speech and misinformation, and its handling of the 2018 Cambridge Analytica breach. State law permits penalties of up to $5,000 per violation, and the jury multiplied several dozen company statements it found deceptive by the number of Facebook users in the state, and sometimes the total population of the state, with $5000 for each person and each statement resulting in a maximum penalty that could have exceeded $200 billion. Meta called the $25 billion award disproportionate, noting that it exceeds the $20.8 billion Deepwater Horizon settlement and threatens the company’s ability to operate in the state. The unusually large award could face constitutional challenges on appeal, particularly over proportionality and free-speech concerns. Meta argued that the penalty should have instead ranged from $345 million to $3.5 billion, while disputing even those amounts.
Context – The massive scale of the $25 billion award is the key point. By way of comparison, Meta paid a settlement of $5 billion in 2019 to the Federal Trade Commission to resolve the Cambridge Analytica data breach federally, and a further $725 million to settle a national class action related to the breach. In August, Meta settled a massive multi-state lawsuit brought by 48 state attorneys general that focused on harm to young people for $12 billion, with the potential of nearly $6 billion more if TikTok and YouTube reach similar settlements. That multi-state deal included $459 million to resolve the claims from those states related to Cambridge Analytica. Finally, the Meta award exceeds the total annual spending of the New Mexico state government. Meta’s appeal will likely argue the huge fine violates the Eighth and Fourteenth Amendments, claiming it is a grossly disproportionate, confiscatory penalty that lacks proof of actual consumer harm.