Meta Ordered to Pay $25 Billion in New Mexico Facebook Privacy Case

Key Takeaways

• $25 Billion Civil Penalty: A New Mexico judge ordered Meta to pay $25 billion after a jury found 43,899,725 violations of the state's Unfair Practices Act.
• Misleading Consumer Statements: Jurors found 26 of 29 Facebook statements misleading, covering privacy practices, third-party data access, misinformation, hate speech and content enforcement.
• Penalty Reduced From $219.5 Billion: The court calculated nearly $219.5 billion in statutory penalties before reducing the judgment to $25 billion, with annual interest of 15% until payment.
• Meta Plans to Appeal: The company disputes the findings and the penalty calculation, arguing that New Mexico failed to establish that individual consumers were actually misled.
• State Enforcement Authority: New Mexico pursued the Cambridge Analytica case independently, securing a judgment that could have implications for how states enforce consumer protection laws against major technology companies.

Deep Dive

A New Mexico judge has recently ordered Meta to pay $25 billion in civil penalties after a jury found that Facebook repeatedly misled consumers about their personal information and the company's handling of harmful content. The judgment, issued Wednesday, is among the largest financial penalties ever imposed on a U.S. corporation.

The lawsuit grew out of the Cambridge Analytica scandal, but the state's case extended well beyond the misuse of personal data by a political consulting firm. Prosecutors challenged Facebook's public statements about who could access user information, how the company addressed misinformation and hate speech, and whether it enforced its own policies consistently.

District Judge Francis J. Mathew initially calculated a penalty of nearly $219.5 billion, applying the statutory maximum of $5,000 to each of 43,899,720 violations used in the court's calculation. He then reduced the amount to $25 billion. The judgment also requires Meta to pay annual interest of 15% until the penalty is satisfied. The company plans to appeal.

"Facebook's wrongdoing—over the course of years and systematically broadcast to the public—goes to the heart of Facebook's core business practices," Mathew wrote in his ruling.

From Cambridge Analytica to a $25 Billion Judgment

New Mexico sued Facebook in 2021 following revelations that Cambridge Analytica, a British political consulting firm involved in Donald Trump's 2016 presidential campaign, had obtained personal information from as many as 87 million Facebook users through a third-party application.

The scandal exposed weaknesses in Facebook's controls over outside developers' access to personal information. New Mexico's lawsuit also examined what the company had told consumers about those controls and whether its public assurances reflected its actual practices.

During a 13-day trial, jurors examined statements made by Facebook and its leadership between 2010 and 2021. On September 25, they found 26 of 29 statements misleading.

The findings covered representations about privacy settings, third-party access to information, misinformation, hate speech and the enforcement of Facebook's content policies. The jury concluded that the company had committed millions of willful violations of New Mexico law.

The number requires some explanation. It does not mean that nearly 44 million individual New Mexicans were found to have been deceived. Instead, the violations were calculated using the expected or reasonably anticipated audience for each misleading statement, drawing on Facebook's user base in the state or New Mexico's population.

That method produced 43,899,720 violations involving unfair or deceptive trade practices, along with five additional violations involving unconscionable trade practices. The New Mexico Department of Justice reported the combined figure of 43,899,725, while the court used the smaller figure in calculating the monetary penalty.

Under the Unfair Practices Act, each willful violation can carry a civil penalty of up to $5,000. Applying that maximum produced a figure of $219,498,600,000.

Mathew found that the duration of the conduct, the repeated misleading statements and the involvement of senior Facebook executives supported the maximum statutory penalty. His written judgment reduced the amount to $25 billion without setting out a separate calculation explaining the reduction.

The state had requested between $35 billion and $40 billion. Meta argued that the penalty should be capped at $3.45 billion, warning that a larger award could violate constitutional protections and discourage companies from operating in New Mexico. The court has not yet resolved whether Meta should be subject to additional injunctive relief. That question remains pending further briefing.

Meta Disputes the Ruling

Meta has rejected the state's allegations and challenged the legal basis for the penalty. In court filings, the company argued that the evidence showed it did not sell user information and that New Mexico had failed to prove any individual consumer was actually misled. C.J. Mahoney, Meta's chief legal officer, criticized the judgment as an attempt to regulate online speech through consumer protection litigation.

"At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online," Mahoney said in a statement reported by Axios. He added that Meta was confident it would prevail on appeal.

The appeal is expected to focus in part on the state's method of counting violations. The jury's calculation treated the potential audience for each misleading statement as the basis for determining the number of statutory violations. Meta has argued that the state did not establish that those consumers actually saw or relied upon the statements.

The size of the award raises a separate question about whether the penalty is constitutionally excessive. The court's decision to reduce the statutory calculation from nearly $219.5 billion to $25 billion does not settle that dispute.

For now, the judgment establishes a substantial financial liability, although New Mexico has not collected the money. At the 15% annual interest rate specified in the order, the outstanding $25 billion principal would accrue $3.75 billion in interest over a year, before accounting for any payments or changes resulting from further proceedings.

New Mexico Attorney General Raúl Torrez welcomed the decision, describing it as a victory for consumers and the state's authority to enforce its laws against large technology companies.

"For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law," Torrez said. "A New Mexico jury found nearly 44 million violations of our consumer protection statute, and this penalty order demonstrates that those violations carry real consequences."

New Mexico pursued the Cambridge Analytica litigation independently rather than settling its claims alongside other states. Meta previously reached a settlement covering similar allegations brought by six states for approximately $459.2 million. In 2019, the company also agreed to a $5 billion Federal Trade Commission penalty over privacy violations.

The case also comes after separate proceedings in New Mexico concerning the safety of children using Meta's platforms. Earlier this year, the state secured a $375 million jury verdict over allegations that Meta misled consumers about the safety of its services for younger users. That litigation is distinct from the Cambridge Analytica case.

The $25 billion judgment now faces an appeals process likely to examine both the evidence supporting the jury's findings and the way New Mexico converted those findings into financial penalties. The outcome could determine how broadly state consumer protection laws may be applied to corporate statements distributed across large online audiences.

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