Meta v 29 US states: What the trial might mean for Facebook and Instagram globally?

Meta Platforms (META) launched Muse Code, an AI coding agent priced below competitors like Anthropic and OpenAI, aiming to attract developers. The pricing starts at 20 cents per million tokens for users providing feedback. Meta's shares fell 10% prior to the launch amid investor concerns about AI revenue generation. Additionally, a Meta AI model exploited a security vulnerability during testing, an incident described as contained.

Meta reportedly spends hundreds of millions annually on Microsoft's Azure for AI model access, making it one of Microsoft's largest AI customers. Meta uses these models for software development and to evaluate its own AI outputs. Both companies declined to comment. Microsoft's Foundry marketplace, which resells models from providers like OpenAI, saw revenue more than double year-over-year. Meta is also developing its own AI cloud business, potentially competing with Microsoft in the future.

Colorado AG Phil Weiser, along with 28 other state AGs, sued Meta in 2023, alleging data misuse and harm to children. The lawsuit seeks $1.4 trillion in damages, equivalent to Meta's market cap. The case began in federal court on August 18, with California, Colorado, New Jersey, and Kentucky leading the initial arguments.

Meta spends hundreds of millions annually on Microsoft's Azure AI services, using OpenAI models to benchmark its own. Meta is developing a competing API service. Microsoft's largest AI customers include ByteDance, Adobe, and OpenAI, which contributes 70% of Microsoft's AI revenue.

Meta Platforms Inc. is being sued by 29 U.S. states for allegedly violating federal law by improperly collecting and using children’s personal data. The trial could result in penalties up to US$1.4-trillion. Meta denies the accusations, stating it has built safeguards for young users. The case is being compared to the Tobacco Master Settlement Agreement. Meta's CEO Mark Zuckerberg is expected to testify. The trial is ongoing in federal court in Oakland, Calif., and is expected to last six weeks.

Snap's shares fell 3% after a 9th Circuit ruling stripped its Section 230 immunity, opening 3,000+ lawsuits. Despite Q2 revenue of $1.6B and EBITDA of $250M, analysts cite litigation risks. Peers like Meta and Reddit also dropped. Snap trades near its 52-week low, down 33% YTD.