New Mexico Judge Orders Meta to Pay $25bn Over Facebook Deception

A New Mexico judge ordered Meta Platforms (NASDAQ: META) to pay $25bn in civil penalties yesterday for deceiving Facebook users. Judge Francis Mathew imposed the penalty after a jury found more than 43 million violations.

Meta, which owns Facebook and Instagram, closed yesterday at $697.52, up 0.47% from $694.25, with the ruling reported during the US session. That leaves the shares about 10% below the $777.59 close of the 24th of September, the high of the past three months.

The penalty follows a trial, not a settlement. The state had sought up to $40bn, and the judge wrote that the maximum at $5,000 per violation would have been about $219.5bn. The ruling also accrues 15% annual interest until paid. Meta’s chief legal officer, C.J. Mahoney, said the company would challenge it.

This ruling, and the Attorney General’s approach to this enforcement, makes it all but impossible to do business in the state of New Mexico. At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online. We are confident we will prevail on appeal.

C.J. Mahoney, Meta

Meta said its third-quarter revenue was $64.6bn, up 26%, with net income of $9.86bn, or $3.83 a share, after a $9.9bn charge for its August settlement with a group of state attorneys general, which did not include New Mexico. The $25bn order is about 2.5 times that profit and about 30% of the $82.4bn in cash and marketable securities Meta reported, against $83.7bn of debt. Free cash flow was negative $2.1bn after $34.9bn of capital spending.

New Mexico went to trial alone: 48 other states settled earlier. Attorney General Raúl Torrez said the judgment, from a state that is not large by population, should be a clear warning to everyone in big tech.

Chief financial officer Susan Li told the earnings call that a number of youth-related trials are scheduled in the coming months, and that Meta continues to monitor legal and regulatory matters that could significantly affect its results. The test is whether Meta books a charge and whether other states follow New Mexico.