This week, Meta agreed to pay up to $16.7bn to settle claims from 29 US states that it built addictive features into Facebook and Instagram and misled the public about the harm.
The company did not admit wrongdoing. Alongside the payment, it agreed to a default two-hour daily time limit for under-18 users that only a parent can lift, blocks on overnight use, restrictions on notifications during school hours and the removal of visible ‘like’ counts for teenage users.
The settlement figure is well below the range anticipated before the trial. Meta's own filings had put the ceiling on potential penalties at around $1.4trn, while the states' attorneys general had argued for a figure closer to $200bn.
Meta shares rose in pre-market trading on the news before trending lower over the course of the day.
Hargreaves Lansdown senior equity analyst Matt Britzman called the settlement “a monster settlement by almost any measure,” but said that for Meta it “looks more like the removal of a major cloud than the start of a storm”.
This was “nowhere near the ‘big tobacco’ moment some had been warning about”.
Britzman said investors were likely to treat the deal as “a painful but manageable price for greater certainty,” with Meta's “bigger opportunity” in advertising and AI “unchanged”.
AJ Bell head of markets Dan Coatsworth set the sum against Meta's other spending, noting that “in the context of the $145bn it has allocated to AI-related spending in 2026,” the settlement “may well feel a price worth paying.”
To him too, the deal “removes a cloud hanging over the business,” which “explains why what might seem like a major setback at face value has prompted a modest increase in the share price”.
Coatsworth added that “litigation over these issues is becoming an occupational hazard for the owners of social media platforms” and called the settlement “very unlikely to be the last word in the legal backlash against the industry”.
Whether the product changes take hold as described depends on enforcement once the settlement receives court approval, a process for which no independent monitoring mechanism has yet been made public.
While the settlement will be good news for investors, I am left with much to be desired from this trial. The debate on social media usage and addiction affects everyone with a phone in their pocket. In the UK, it seemed we were all getting involved in the discussion at the time of the Netflix drama Adolescence, which made even people who had never worried about a teenager's screen time start to consider it.
For a while, we blamed parents, but then parents started taking responsibility and action to protect their children. Politicians, often slow moving at the best of times, are also moving towards taking actions to help young people.
But I am unconvinced that the main characters in this story – the social media companies – are doing enough.
And this settlement is a step in the wrong direction rather than the right one as it fails to prove the accusations made against the company: that Meta knew Instagram’s algorithms could make teenagers addicted to social media, or was even built this way on purpose.
With this affair I feel like I’ve been watching a show I was enjoying that Netflix cancelled (as it does) straight after the big cliffhanger at the end of season one. We were about to find out. Instead, we get a cheque and a blog post about how “ensuring teens have a safe and productive experience on our platforms is an absolute imperative for Meta”.
The market had a predictably muted reaction – not that I was ever expecting it to deliver an ethical verdict. But what the share price move does tell you is what $16.7bn actually cost Meta: not very much.
All we get is a two-hour limit, hidden 'like' counts and overnight blocks. Whether any of that is sufficient we don't yet know, because we don't know what the execution will look like. Will they be easy to work around? Is this another box-ticking exercise dressed up as reform? Another blunt instrument to pretend to tackle a problem?
The good thing about never finding out who is responsible is this: it would be rather hard to justify investing in a company that knowingly and purposefully addicted children from an ESG perspective. Thankfully, we will never have to find out and we can all keep happily investing in it.
Matteo Anelli is deputy editor at Trustnet. The views expressed above should not be taken as investment advice.