Meta Platforms Inc. (NASDAQ:META) agreed to pay up to $17 billion to resolve claims from 29 states that it designed its platforms to addict children, a settlement that drew starkly different reactions from investors relieved by the certainty and lawmakers who called it far from enough.
Lawmakers Say It’s Not Enough
Sen. Bernie Sanders (I-Vt.) said the settlement was “a good step forward” while adding that “much more needs to be done” to put “our kids’ health over Big Tech oligarchs’ greed.”
Sen. Richard Blumenthal (D-CT) said the settlement shows Meta “is guilty of harming kids” and strengthens the case for Congress to pass the Kids Online Safety Act, while Sen. Dick Durbin (D-Ill.) said the Mark Zuckerberg-led company “has chosen profits and growth over the safety of children” time and again and called on Congress to regulate Big Tech on a bipartisan basis.
Illinois Gov. JB Pritzker called the settlement “a confession of the harm” done to children, pointing to the state’s own Children’s Online Social Media Safety Act as a next step.
Not every state signed on. Florida Attorney General James Uthmeier called the payouts “peanuts” compared to the harm caused, saying, “We’ll see them at trial.”
Wall Street Says the Payout Is Small Relative to Meta’s Earnings
Futurum Equities’ market strategist Shay Boloor said the roughly $16.7 billion settlement “sounds enormous until you put it against the earnings machine,” noting that Meta is expected to generate about $340 million in profit per day by 2028, with the entire settlement amounting to roughly 49 days of profit.
Deepwater Management‘s managing partner Gene Munste said Meta shares rose on the news, calling it evidence that “investors value clarity, even if the news is bad.”
He compared the deal to the 1998 Big Tobacco settlements, saying the $1.8 billion in annual penalties look small against projected annual free cash flow of $40 billion to $60 billion by 2029.
Gary Black, The Future Fund Managing Partner, said the settlement removes the risk of an “existential adverse verdict” that could have approached $1.4 trillion, roughly equal to Meta’s market cap, though he cautioned it likely won’t eliminate the thousands of individual lawsuits still pending against the company.
The Deal Doesn’t Touch Meta’s Core Design
Analyst Rihard Jarc said the new usage limits will have “very limited effect” on Meta’s business, since users under 18 aren’t a large share of its user base, direct messaging is excluded from the restrictions, and parents can remove the limits entirely.
Price Action: Shares closed 1.07% higher on Wednesday at $576.14 and gained 0.51% in extended trading.
Benzinga edge rankings indicate Meta’s stock has a Momentum score in the 10th percentile and a Growth score in the 78th percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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