Meta Platforms shares fell sharply as a major child-safety trial opened in federal court in Oakland, putting both the company’s finances and the design of Instagram and Facebook under scrutiny.
META stock closed Tuesday down about 4.5% at $543.67, extending recent weakness as investors weighed the legal risk. The case involves a broader coalition of 29 states, with California, Colorado, Kentucky and New Jersey leading the trial currently before U.S. District Judge Yvonne Gonzalez Rogers.
The states accuse Meta of deliberately using features designed to keep children and teenagers engaged while misleading users about potential risks. Meta denies the allegations and says it has invested heavily in protections for younger users.
Meta Faces Penalties That Could Reach Hundreds of Billions
The most dramatic figure attached to the case is $1.4 trillion, but that is not a fixed demand from the states.
Meta itself calculated that potential penalties could theoretically reach that level under the states’ proposed interpretation of consumer-protection laws. The company has described the figure as excessive and unprecedented. Attorneys general have suggested the amount could instead be closer to $200 billion.
The trial is expected to run for roughly six weeks, with Meta CEO Mark Zuckerberg and Instagram chief Adam Mosseri among those expected to testify.
Former Meta safety engineer Arturo Bejar has already begun giving evidence. He told the court that safety was not always considered when products such as Reels were introduced and argued that Meta’s internal systems failed to capture the scale of problems experienced by young users. Meta disputes his characterization.
Platform Changes Could Matter More Than the Fine
For investors, the legal threat goes beyond financial penalties.
The states are seeking changes to Facebook and Instagram that could include removing or restricting features such as infinite scroll and likes, introducing stronger age controls and limiting how younger users interact with the platforms.
That matters because Meta’s advertising business depends heavily on engagement and recommendation systems. Court-ordered changes that reduce time spent on Instagram or Facebook could have longer-term consequences for user growth and ad revenue.
The Oakland case also follows a major legal setback for Meta in New Mexico. A jury initially imposed $375 million in civil penalties in March, and a later ruling added a $567 million youth mental-health fund, bringing the potential total recovery to roughly $942 million. Meta is appealing.
The current trial could have much broader implications because the states are targeting the design of Meta’s platforms rather than only isolated cases of harmful content. A ruling requiring significant product changes could influence how other social-media companies structure services for younger users.
