Last week, a district court judge in New Mexico ordered Meta to pay $25 billion for misleading Facebook users about how it handled their data.
It’s an eye-popping number, not only the largest fine ever levied against Meta, but also the largest ever levied against any technology company.
The thing is, Meta can absorb it. Two months ago, it agreed to pay up to $18 billion to settle claims from 29 states that it designed Instagram and Facebook to addict kids – and its stock went up.
The New Mexico order landed just hours before Meta’s Q3 earnings call, where the company reported a 26% year-over-year revenue increase to $64.2 billion. Of that, $63.1 billion came from ads.
In other words, Meta earned more than 2.5 times its penalty in a single quarter.
Promises, promises
The New Mexico case dates back to 2021, when the state’s attorney general sued Meta after the Cambridge Analytica scandal. The state said Meta lied to users in New Mexico about who could access their data and, in September, a jury found more than 43 million violations of New Mexico’s consumer protection law.
Lawyers for the state pointed to, among other things, a 2010 Washington Post op-ed in which Mark Zuckerberg wrote that Facebook does not and never will sell user data.
Judge Francis Mathew, a district court judge in the First Judicial District of New Mexico who presided over the case, called the deception intentional. “Facebook promised users that they (the users) controlled their data,” he wrote in the order. “This was false.”
Multiplying the violations by New Mexico’s statutory maximum of $5,000 per violation, the judge landed on a theoretical penalty of more than $219 billion, but then pared it back to $25 billion.
Meta has said it will fight the decision, of course.
“At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online,” said Meta’s chief legal officer, C.J. Mahoney, in a statement. “We are confident we will prevail on appeal.”
Reckoning or rounding error?
Regardless of how this all plays out, the case shows what’s at stake when data promises don’t match reality.
Because although the penalty “may be exceptional,” said Lara Compton, SVP of global marketing at digital identity verification platform SheerID, “the warning to the ad tech industry isn’t.”
“This case is fundamentally about the gap between what companies promise consumers they’ll do with their data and what actually happens to it,” Compton said. “For an industry built on complex relationships between advertisers, platforms and data partners, this should be a wake-up call.”
Compton sees the ruling as part of “a bigger reckoning over accountability, and consumers are pushing for it, she said. According to research released by SheerID last week, 56% of consumers say they want personalization that only uses information they’ve explicitly consented to share.
“Consumers are demanding greater transparency about who has access to their information and how it’s being used,” Compton said.
But not everyone’s convinced a reckoning is coming.
Penalties like this “make great headlines because they put a number on something the ad industry already knows and would rather ignore,” said Stewart Sullivan, CEO and co-founder, of programmatic ad platform Drako.
“The biggest players have the resources to absorb consequences that would put most companies out of business,” Sullivan said, “and a huge penalty doesn’t necessarily change the incentives that got us here.”
Meanwhile, AI and large language models “are already changing how people find information and how advertising reaches them,” he said. “Those forces will reshape this business much faster than the courts can resolve cases about its past.”
Put your money where your privacy is
If courts can’t keep up, then the pressure must come from somewhere else.
One answer – and this really is the lowest-hanging fruit possible – is for companies to be clear about what data they’re collecting, why they need it and how they’ll use it, and then to honor those commitments.
“The companies that prioritize transparency will be better positioned to earn consumer trust and build sustainable customer relationships,” Compton said.
But, really, the onus should be on the people writing the checks, according to Sullivan.
“Every media budget helps fund somebody’s business model and rewards the choices they make,” he said. “If transparency, privacy and fairness are values your brand claims to hold, they should carry some weight in where you spend.”
And “if a partner repeatedly falls short,” he added, “at some point you have to answer a pretty basic question: Why are you still giving them your money?”
