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Meta Reaches Multi-Billion-Dollar Settlement With US States Over Social Media Addiction Allegations

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Meta Reaches Multi-Billion-Dollar Settlement With US States Over Social Media Addiction Allegations

Meta Platforms (META) has agreed to pay billions of dollars to settle a multistate lawsuit alleging, among other things, that the company's social media platforms negatively affect young users' mental health.

A bipartisan group of 52 attorneys general across US states -- including California -- territories, and the District of Columbia joined the agreement, Meta said in a statement Wednesday. The proposed settlement includes a payment of up to $16.68 billion to the states over 10 years, a court document showed.

The proposed settlement of the lawsuit, which centered on the alleged "harmful features" of Meta's Instagram and Facebook social media platforms, still requires court approval through a "consent judgement," California Attorney General Rob Bonta said in a separate statement.

Meta is also required to take measures under the settlement deal, such as setting daily limits and nighttime blocks for teenage users of its social media platforms, providing muted notifications during school hours, and allowing new controls for parents.

"Today, we have secured a settlement with Meta that will make social media less dangerous for our kids and make a world of a difference for children and their families," Bonta said. "Meta has agreed to make massive transformations that will reduce the risk of harm from its platforms -- and will do it within months."

Meta said the agreement includes a payment of about $18 billion, to be distributed in annual installments over a 10-year period. That includes about $12.7 billion to participating states.

The remaining roughly $5.3 billion, according to Meta, will be released if Alphabet's (GOOG, GOOGL) YouTube and TikTok "implement a one-hour daily limit, night mode, and age assurance measures" and they each pay an amount equal to the 30% figure, "with half of the remaining funds tied to YouTube's payment and half tied to TikTok's."

"Ensuring teens have a safe and productive experience on our platforms is an absolute imperative for Meta," the company said. "We want to get this right for parents and teens, and that's why we partnered with state attorneys general to set a new industry standard."

Meta said it expects to "accrue a legal expense" of about $10 billion in the third quarter in connection with the settlement. The charge was not contemplated in the expense range provided on Meta's second-quarter earnings call, according to the company.

Alphabet and TikTok's parent, ByteDance, didn't immediately reply to' requests for comment.

Meta shares were up 1.8% in Wednesday afternoon trade, while Alphabet's class A and C shares were down more than 2% each.

Price: $575.51, Change: $+5.46, Percent Change: +0.96%

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