Meta and U.S. states discuss possible settlement in teen social media addiction trial – Bloomberg

Meta Platforms (META) and several U.S. states are discussing a potential settlement in a trial alleging the company designed Facebook and Instagram to addict teenagers. The states seek financial penalties and operational changes, while Meta denies the claims and calls the proposed changes unreasonable. The company estimates potential penalties could reach $1.4 trillion if it loses the case. The trial, in its second week, has included testimony from Meta executives.

Meta Platforms and state attorneys general have reportedly discussed settling a lawsuit alleging the company designed Facebook and Instagram to be addictive to young users. Bloomberg News cited people familiar with the matter, while Reuters could not verify the report.

Instagram CEO Adam Mosseri testified in a trial, denying allegations that Meta hid low usage of teen safety features. Prosecutors questioned him about not disclosing that only 1.8% of teens used the 'Take a Break' tool. The lawsuit, brought by 29 US states, alleges Meta designed addictive products harming young people's mental health and collected data from children under 13 without parental consent. Meta denies the allegations, with potential damages up to $200bn if found liable.

Instagram CEO Adam Mosseri testified in a trial that he does not instruct employees to hide information. He acknowledged Meta restricted access to internal research after a 2021 whistleblower leak. The trial involves 29 state AGs alleging Meta violated child privacy laws and misrepresented safety features, seeking up to $200B in penalties. Meta denies the claims.

Four U.S. states sued Meta, seeking $1.4T in damages, alleging Facebook and Instagram are addictive and harmful to minors' mental health. Meta denies claims, stating social media addiction isn't a recognized condition. The trial's outcome could impact Meta's valuation and future regulations on social media platforms.

NVIDIA (NVDA) reported Q1 FY27 revenue of $82B, up 85% YoY, driven by strong demand for Blackwell. Meta (META) reported Q2 2026 revenue of $60.8B, up 28% YoY, but EPS missed estimates due to legal and severance charges. NVDA's gross margin held at 75%, while META's operating margin compressed. Both companies are expected to lead the Magnificent Seven into Q3, with NVDA focusing on AI infrastructure and META on ad automation.