Meta has agreed to pay up to $17.1 billion to settle claims brought by 47 states and thousands of families who allege that Facebook and Instagram were designed to be addictive to children.
The proposed settlement has also renewed scrutiny of Meta’s dual-class share structure, which gives chief executive Mark Zuckerberg 10 votes for every share held by ordinary investors. He controls about 61% of the company’s voting power despite owning 13% of its shares.
Critics argue that the arrangement allowed one executive to override shareholders who had repeatedly raised concerns about child safety, platform integrity and the potential damage to Meta’s value.
As You Sow, the shareholder advocacy group, said it filed a resolution in 2019 highlighting more than 45 million images of child sexual abuse and torture linked to sex trafficking on Facebook. It submitted further resolutions over five consecutive years calling for stronger protections for users, employees and investors.
At Meta’s annual meeting in 2020, faith-based investors brought forward a sex-trafficking survivor who had allegedly been groomed on Facebook between the ages of 15 and 18 before being trafficked. That year, investors also filed a proposal known as “Reboot Facebook”, calling for account verification, the removal of abuse images and an end to political adverts containing known lies.
A content governance resolution submitted in 2021 won 63.1% of the independent shareholder vote, according to the group. Once Mr Zuckerberg’s additional voting rights were included, however, the reported result fell to 19%.
The settlement’s final cost could depend on whether other technology companies join it. If YouTube and TikTok do not participate, Meta’s obligation would fall to about $12 billion and proposed safeguards for teenagers would not take effect.
The payment would be spread over 10 years and is described by critics as only a small proportion of the damages claimed in plaintiffs’ models, which put the potential figure in the trillions. Meta’s legal team is also said to have designed the terms to create an “industry standard” rather than leave the company exposed on its own.
Questions over Meta’s child-safety measures
Concerns have been raised about whether the proposed measures would offer effective protection. Age verification would operate on a “best-effort” basis, meaning Meta could argue that it had taken reasonable steps even if a 12-year-old entered an adult date of birth or opened a new account.
The settlement would also not address allegations concerning hate speech linked to lynch mobs abroad or the platform’s alleged role in sex trafficking.
Meta has already faced two public nuisance verdicts in New Mexico this year, involving awards of $375 million in March and $567 million in August. A Los Angeles jury separately found Meta and Alphabet negligent in the design of their platforms.
Thousands of other cases remain outstanding, with trials due to resume in October and further billions of dollars in potential costs at stake.
The dispute has intensified calls to end dual-class share structures and restore a “one share, one vote” system. Critics say shareholders who carry Meta’s financial risk should not be able to have their decisions overridden by a single executive with enhanced voting rights.
They have also criticised the Securities and Exchange Commission for beginning proceedings to rescind Rule 14a-8, which permits shareholders to submit proposals to companies. The move is described as part of a wider effort to restrict communication between investors and the public companies they own.
