Meta New Mexico penalty of $25 billion lands in privacy case

The Meta New Mexico penalty is $25 billion. On Wednesday, Oct. 21, state District Judge Francis Mathew ordered Meta Platforms to pay that sum in civil penalties after a jury found the company had broken New Mexico's Unfair Practices Act 43,899,725 times, the state's Department of Justice said.

What happened

The case dates to 2021, when Attorney General Raúl Torrez's office sued over the Cambridge Analytica scandal, in which the political consulting firm obtained data from as many as 87 million Facebook users through a third-party app, Reuters reported via NBC News. The state argued Meta misled users about who could access their data and about how it handled hate speech and misinformation.

Mathew wrote that Facebook's wrongdoing "goes to the heart of Facebook's core business practices." He found that a penalty of more than $219 billion was warranted under state law but reduced it to $25 billion. The BBC said the judge described the conduct as "willful" and spanning more than 11 years, from 2010 to 2021. The penalty carries 15% annual interest until it is paid, according to PPC Land.

Meta's head lawyer CJ Mahoney told the BBC the ruling made it "all but impossible to do business in the state of New Mexico" and said the company would appeal. Meta has argued that a penalty in the billions risks violating its constitutional protections against excessive fines.

It is not New Mexico's first win against the company this year. A jury found Facebook liable in the Cambridge Analytica case on Sept. 25, and in August a court ordered Meta to pay $942 million and overhaul child protections on Facebook and Instagram in a separate case, according to the state's Department of Justice. The court has reserved a decision on injunctive relief for later briefing, PPC Land reported.

Why it matters

For scale, the Federal Trade Commission fined the company $5 billion in 2019 over the same scandal. Six other states settled their Cambridge Analytica claims for $459.2 million as part of a $17.1 billion multistate deal in August, NBC reported. New Mexico chose to go to trial instead.

Money is not the immediate problem. Meta reported $82.45 billion in cash and marketable securities at the end of September, and D.A. Davidson analyst Gil Luria said the ruling was costly but unlikely to affect the company's value, noting Meta is "worth nearly $2 trillion" and will likely appeal. The Meta New Mexico penalty does show that state consumer laws can produce numbers on the scale of federal fines.

The ruling landed on the same day Meta reported results that included a separate $9.89 billion charge for its teen mental health settlement with state attorneys general. It also comes as Meta pushes deeper into AI products, the strategy behind its Meta Muse Wonder models, at a time when investors already question the cost of the AI race, as the BofA AI capital cycle warning showed.

What's next

An appeal could take years, and interest will accrue meanwhile. Meta also warned in its results that it faces several youth-related trials in the U.S. in the coming months.

The state's statement and a copy of the judgment are on the New Mexico Department of Justice site. How the Meta New Mexico penalty fares on appeal will set the tone for other state cases.