Meta CEO and Chairman Mark Zuckerberg arrives in Los Angeles Superior Court on February 18, 2026, in Los Angeles, ahead of a social media trial that will determine whether the social media giant intentionally designed its platform to be addictive to children.
Frederick J. Brown | AFP | Getty Images
Meta received a scathing rebuke this week in two high-profile lawsuits, compounding the company’s challenges as it chases rivals in the artificial intelligence space and navigates an increasingly complex social media landscape.
Both trials (one in Santa Fe, New Mexico, the other in Los Angeles) pointed to the struggles Meta faces in adequately policing Facebook and Instagram, which remain major sources of funding for the company due to their dominant positions in digital advertising.
A Santa Fe jury ruled Tuesday that Meta Inc. misled users about the safety of its social apps when it came to children being targeted by online criminals. The next day, an LA jury ruled against Mehta. Google YouTube determined in the personal injury trial that their negligence was a “substantial factor” in causing mental health-related harm to the plaintiff, identified as KGM or Kaylee.
Timothy Edgar, a lecturer at Harvard Law School, characterized the results as “a watershed moment that signals a major shift in how Americans view Big Tech.”
“This is kind of the culmination of the skepticism that has been growing over the years,” Edgar said.
Wall Street is skeptical for entirely different reasons, with Meta’s stock price down more than 2% over the past year as of Wednesday’s close, largely due to the company’s decentralized AI strategy and continued high costs. Shares fell more than 6% on Thursday, the biggest decline since October.
Some of the biggest tech stocks include microsoft Only one other company has declined in the past year. Meanwhile, Alphabet soared more than 70%.
Meta plans to spend up to $135 billion in capital spending this year, even though its AI models lag far behind those of rivals Google, OpenAI and Anthropic and do not present significant new revenue opportunities in the market.
Meta Inc. on Wednesday announced hundreds of layoffs across multiple divisions, including Reality Labs, which oversees virtual reality, augmented reality and AI-powered wearable devices. These layoffs follow January layoffs at Reality Labs, which affected 10% of the division, representing more than 1,000 employees.
While this week’s ruling represents a sharp public criticism of Meta’s business, the fine is just a slap on the wrist for a company with a market capitalization of $1.5 trillion and annual net income of more than $60 billion.
In the New Mexico case, a jury found that Mehta must pay $375 million in damages, while a Los Angeles jury ruled that Mehta and YouTube must pay a total of $6 million in compensatory and punitive damages, with Mehta paying 70% of the damages.
Both Meta and YouTube expressed disappointment with the ruling and said they would appeal.
A Mehta spokesperson pointed out that the jury in the Los Angeles case awarded the plaintiffs less than 0.5% of the amount sought by their lawyers. In New Mexico, state attorney Linda Singer asked a jury to impose civil penalties for meth that could exceed $2 billion.
bell weather case
The precedent may be more concerning than the amount, as there are a number of upcoming social media safety and addiction trials involving Meta and its peers.
Lexi Hazam, an attorney representing school districts and other plaintiffs in a federal social media trial scheduled to begin this summer in Northern California, said she expected additional fines. Hazam noted that this incident is one of several in the state involving social media-related personal injury.
“This is a person who has caused harm to her mental health, and we believe that these figures are certainly appropriate and will have the desired effect of compensating for her harm in each individual case and punishing the two defendants in an appropriate manner,” Hazam said after the verdict.
The judgment also points out the possibility of taking into consideration the provisions of Article 230 of the Communications Decency Act, which provides for freedom of speech. New Mexico Attorney General Raul Torrez is spearheading an ongoing lawsuit similar to the state’s case against meth. snaptold CNBC on Tuesday that “there is a clear possibility that these events will motivate Congress to reconsider Section 230 and significantly amend, if not eliminate, Section 230.”
“I think that for a jury to award a penalty and hold a company accountable is an important signal to policymakers in Washington, D.C., that there is an urgency that we need to address these issues in our community,” Torrez said.
Sen. Dick Durbin (D-Ill.), ranking member of the Senate Judiciary Committee, supports overhauling Section 230 and said the latest ruling supports his argument.
“The successive decisions in New Mexico and California show that Big Tech has become Big Tobacco,” Durbin said in a statement, referring to the 1990s when tobacco companies were forced to pay billions of dollars for lying to the public about the harms of their products. “Now is the time for Congress to repeal Section 230 once and for all.”
Edgar, of Harvard Law School, said there’s a good chance these cases will end up in the Supreme Court on free speech grounds. Edgar said the ruling is “consistent with the overall backlash against Big Tech,” but added that there could be “unintended consequences.”
Mr. Edgar said that in 10 or 20 years people might look back and say: “The internet was once a free, robust, widely open place, but now it’s been tamed and regulated by the fact that people are afraid of what they say online. That worries me.”
Attention: Meta and YouTube found liable in social media addiction lawsuit.
