The Cambridge Analytica scandal, named after the British firm involved in the campaign that brought Donald Trump to power in 2016, exposed in 2018 how the data of tens of millions of Facebook users had been collected without their knowledge and exploited for political purposes.
The scandal had already resulted in a $5 billion fine against Meta in 2019, imposed by the Federal Trade Commission (FTC), the federal consumer protection agency. That penalty was five times smaller than Wednesday’s.
New Mexico has already imposed a $942 million penalty on the company this year in a case concerning child protection. The parent company of Facebook and Instagram also agreed in late August to pay up to $18 billion in total to settle lawsuits brought by 52 US states and territories over social media addiction among teenagers.
Meta said the case “seeks to impose a tax on speech to enforce new rules about what people can say online.” Some of the statements for which the company was penalized concerned content moderation.
The ruling “makes it nearly impossible to do business” in the state, Meta’s chief legal officer, C.J. Mahoney, said, adding that he was “confident we will prevail on appeal.”
In the meantime, the bill will grow by $3.75 billion a year, with interest accruing at 15% until it is paid. The $25 billion penalty already amounts to one-eighth of the company’s annual revenue of $201 billion in 2025. Meta’s finances are also under pressure from massive investments in the race to develop artificial intelligence, which could reach $145 billion in 2026.
“For too long, powerful technology companies have acted as if their size and influence put them beyond the reach of the law,” state Attorney General Raul Torrez said, welcoming the ruling. “No company is too powerful to be held accountable.” The penalties are to fund an education fund.
Zuckerberg email
On September 25, a jury in Santa Fe found Facebook liable for nearly 44 million violations of the state’s unfair trade practices law, based on 26 misleading statements made between 2010 and 2021. Some of the statements came from CEO Mark Zuckerberg and former chief operating officer Sheryl Sandberg.
The jurors counted, roughly speaking, one violation for each person in the state who may have been exposed to each statement. New Mexico has a population of 2.1 million. At the statutory maximum of $5,000 per violation, the total reached $219.5 billion. Judge Francis Mathew reduced it to $25 billion without explaining his choice.
The state had sought between $35 billion and $40 billion, while Meta had proposed paying no more than $3.45 billion.
In the 20-page ruling reviewed by AFP, the judge noted that after the scandal broke in 2018, Facebook had pledged to investigate apps that had harvested user data and notify affected users. In the end, however, it notified users of only two apps out of the thousands identified.
According to the judge, Facebook’s violations, “systematically disseminated to the public,” go “to the heart” of its business practices, and previous penalties had failed to deter the company.
The judge has yet to rule on the corrective measures sought by New Mexico, including an audit of how user data is managed.
New Mexico is the only state to have taken the Cambridge Analytica scandal to court. The others settled their claims in late August for $459 million as part of the agreement concerning minors.
In March, a jury in Los Angeles found Meta and Google liable for the first time for a teenage girl’s addiction to their platforms. Meta has appealed the ruling.
The company faces further trials, including the first lawsuit brought by school districts, scheduled to go before a federal court in February.
