Meta Inc. CEO Mark Zuckerberg is pictured at the U.S. Capitol after a meeting in the office of Senate Majority Leader John Thune, R.S.D., on March 26, 2026.
Tom Williams | CQ-Roll Call Inc. | Getty Images
If New Mexico created a blueprint for the challenge. metaWhen it comes to significant changes to Facebook and Instagram, California could decide the company’s fate.
Opening arguments begin Tuesday in a lawsuit co-led by California Attorney General Rob Bonta against Meta, following a series of allegations that the company facilitated addictive behavior in teens and children. Jurors were seated last week in federal court in Oakland.
The case involves a coalition of 29 state attorneys general in a unified lawsuit against meth filed in 2023, and will be argued by lawyers representing California, Colorado, New Jersey, and Kentucky. The stakes are high, as key government officials across the country are calling for Meta to be held accountable for alleged violations of federal and state laws, including the Children’s Online Privacy Protection Act (COPPA) and various consumer protection laws.
Industry experts are calling it a “Big Tobacco” moment for social media, with meth as the centerpiece. In the 1990s, tobacco companies were forced to pay billions of dollars for misleading the public about the safety and potential harms of their products, after which their power and influence declined dramatically.
Earlier this month, Meta lost a lawsuit in New Mexico, requiring the company to make some changes to its service and pay nearly $1 billion. But California has so much power and influence that a bad result in Mehta’s home state could result in harsher penalties, including a broader overhaul that would force fundamental changes to key algorithms.
“California is more important than any other jurisdiction in the United States,” said Julia Powles, executive director of the UCLA Institute for Technology, Law and Policy. “This is where they face the greatest legal repercussions, and this is the jurisdiction where they are monitored around the world.”
New Mexico AG Raul Torres, who just won a court victory, told CNBC that the consequences could be “astronomical” for companies that derive 98% of their revenue from online advertising. Meta CEO Mark Zuckerberg is relying on cash generated from the company’s dominant advertising business to fund massive investments in artificial intelligence that could cost the company as much as $145 billion this year.
A New Mexico judge has ordered Mehta to pay $567 million into a sinking fund as part of the second phase of a lawsuit over alleged child sexual exploitation. In the first phase of the trial, a state jury ruled in March that Meta had to pay $375 million for violating the state’s tort law. Meta disagrees with the New Mexico ruling and said it plans to appeal.
Torres called it a “pretty substantive ruling,” but was quick to point out how it pales in comparison to what could happen in the future.
“This is a state of about 2 million people,” Torrez said. “If you apply the same argument to California, Florida, Texas, New York, it’s potentially a huge, market-changing force.”
Avoiding Section 230
Many of the details of the lawsuits vary, but all focus on the alleged harmful design of apps like Facebook and Instagram.
New Mexico requires Meta to improve its AI-powered “age guarantee models and tools” and attempt to “develop a predictive model specifically for under-13s within two years.” Other remedies include making it easier to report underage use and “partnering with schools and child safety organizations to create reporting portals that allow school administrators to flag suspicious accounts on any social media platform where users may be under 13.”
Torrez said the plaintiffs’ focus on the app’s design features and alleged safety misrepresentations “really provides a blueprint for holding other states accountable.” It’s an approach that allows states to circumvent Section 230 of the Communications Decency Act, which typically shields technology companies from legal prosecution for third-party content on their platforms.
Meta and Google YouTube lost its case in March after a Los Angeles jury found the companies were negligent and failed to warn users of the dangers of using the platform.
California Attorney General Rob Bonta speaks at a press conference in February 2024.
CNBC
Bonta, who was appointed to the role of chief executive in 2021 by Gov. Gavin Newsom, said in a statement last Monday that one of his most important jobs is to “protect children from harm.”
“Meth designed a dangerous product for young users, knew it was dangerous, and lied to children, families, and communities about how dangerous it was,” he said. “We are ready to hold Meta to account for its role in fueling the mental health crisis for America’s children, and we look forward to the trial.”
Mehta said in a statement that the AG coalition’s “limited claims are baseless and the financial needs are grossly disproportionate.”
“The AG has not presented any evidence that anyone in each state was misled, argues that innocuous features like having an additional Instagram account somehow harmed residents, and seeks to punish Meta on industry-wide issues like age verification,” Meta said.
Mehta’s lawyers have previously said the state AG’s consolidated trial could result in damages as high as $1.4 trillion. Lawyers representing the states told Chief Federal Judge Yvonne Gonzalez Rogers last week that $200 billion was the more likely figure.
“We could wake up and, like I said, have an astronomical verdict,” Torres said.
Michael Coffey, a defense litigator and founding partner at the New York law firm Coffey Modica, said this is the kind of case that could define a state’s chief executive’s career, while victims may end up receiving very little.
“It would all go to the government, and the government would subsidize it, and the plaintiffs’ lawyers would seize some of it,” Coffey said.
Money aside, the potential design changes that Meta would have to make if it loses in California could be far more damaging, said Laura Marquez-Garrett, an attorney with the Social Media Victims Law Center.
“Private plaintiffs typically have the ability to not have to go through the court system to actually force these companies to change their business models and their design decisions and all of that,” Marquez Garrett, who handled the recent Los Angeles case, said in a media briefing Friday.
In a court filing, the state AG said it is seeking “permanent injunctive relief on a national rather than state-by-state basis to restrain Meta’s illegal acts and practices” for any violations related to COPPA. If Meta is found to have violated federal law, states would require the company to delete all personal data of children under 13 and any “algorithms and models” trained using that information.
Regarding violations of state consumer protection laws, lawyers representing the states said in their filing that they seek to force Meta to remove “certain addictive design features,” including infinite scrolling, autoplay, ephemeral content, beauty filters and “engagement-optimized algorithms.”
Torrez admitted that he wasn’t able to make all of the design changes his team wanted, including eliminating infinite scrolling and changing the company’s recommendation algorithm. The judge in the case said it would be unfair to impose the changes because some of these changes could violate Section 230 and First Amendment protections and would allow rival companies like TikTok and YouTube to continue to function.
Torres said he plans to move through the legislative process a social media bill and an update to the Consumer Protection Act aimed at “capturing the full range of business practices that are common in the digital economy.”
Meta and its social media rivals face multiple other lawsuits across the country, including a major federal trial involving multiple school districts set to begin next year in Northern California. The first trials for multiple unified school districts were scheduled to begin this summer, but Meta, YouTube, TikTok, snap All resolved.
In Torres’ view, Wall Street is underestimating the potential significance of the loss in California and only viewing New Mexico “in isolation.” Meta’s stock price has fallen 11% since the beginning of the year, but most of the concerns expressed by analysts have to do with the company’s large capital expenditures on its AI infrastructure, rather than concerns about a potential deterioration in its advertising business.
“Analysts are not estimating this correctly at this point,” Torrez said. “This California ruling, by itself, could be significant enough to change this company’s ability to do what it needs to do to raise future capital.”
WATCH: Mehta’s federal trial charged with violating child privacy laws moves forward.
