Meta Platforms will take a $10 billion legal expense accrual in the third quarter related to a $18 billion settlement with 52 U.S. state attorneys general over teen usage on Facebook and Instagram, the company said. The accord, which covers 13- to 17-year-olds, includes a two-hour daily limit on the platforms and blocks for night and school hours, alongside usage prompts after extended sessions.
The settlement amount falls well below the $200 billion and $1.4 trillion figures initially contemplated by state attorneys general, according to Citi. Analyst Ronald Josey noted the deal removes a significant overhang on Meta’s shares as the company’s AI product roadmap gains traction. Citi maintained its Buy rating with an unchanged $800 price target.
Meta’s teen users account for less than 1% of revenue, and the platforms already exclude interest, behavior, and demographic ad targeting for users under 18. The company’s third-quarter accrual will also lift 2026 expense guidance, though the restrictions are not expected to materially affect revenue. Citi highlighted the timing of the settlement as favorable, coming ahead of Meta Connect on September 23.
Remaining litigation risks include an appeal by New Mexico and roughly 1,200 school-district cases still pending. The settlement does not cover other major platforms, such as YouTube and TikTok, whose potential inclusion could further alter the financial impact.
