Meta Platforms (NASDAQ: META) has agreed to a landmark settlement resolving California's lawsuit alleging harm to minors on its platforms, committing to pay up to $18 billion over a decade.
The agreement allocates 70% of the total, approximately $12.7 billion, for immediate distribution to the state in annual installments, with the remaining 30%—about $5.3 billion—contingent on industry-wide compliance from competitors including YouTube and TikTok. California is expected to receive between $1.5 billion and $2.1 billion from the settlement.
Under the terms, Meta will implement sweeping operational changes targeting youth safety. Users under 18 will face default daily usage limits of two hours, adjustable only with parental consent, dropping to one hour if competing platforms adopt equivalent measures. A nighttime block from midnight to 6 AM will be enforced for minor accounts, alongside mandatory silencing of notifications between 10 PM and 7 AM and during school hours.
Additional safeguards include disabling algorithmic feeds for minors upon request, eliminating cosmetic procedure-related image filters for teens, and hiding public engagement metrics on minor accounts. The company will also introduce verification systems to remove accounts for children under 13 and subject its compliance to oversight by an independent auditor with direct regulatory access.
Meta expects to record approximately $10 billion in legal expenses in the third quarter of 2026, coinciding with projected capital expenditures of up to $145 billion for AI infrastructure in the same year. The settlement follows Meta's initial stock surge of more than 4% in pre-market trading, which later stabilized.
Attorney General Bonta stated the agreement requires Meta to implement 'massive transformations that will reduce the risk of harm from its platforms—and it will do so within months.'
