A state jury determined that Meta misled users of Facebook regarding its user data policies and content review practices. The charges involved in this trial stem from the Cambridge Analytica scandal in 2016; at that time, external entities obtained data from as many as 87 million users of Facebook.
The jury determined that Meta misled the public regarding data security regulations.
The state government's lawyer argued that Meta on one hand promised users of Facebook that they could control their personal information; on the other hand, it shared this information with external applications, thereby misleading the users. The jury determined that among the 29 statements published by Meta executives or on the company's blog, 26 were misleading.
A spokesperson for Meta stated that the company does not agree with this ruling and plans to appeal. The company's management insists that Meta will protect user information and retains the right to operate its social platform in accordance with the First Amendment of the U.S. Constitution.
The judge will weigh the option of imposing the maximum fine on Meta along with requirements for a security audit.
After the jury determined that there were more than 43 million violations in total, Judge Francis Mathew will decide on the amount of the civil fine. According to state law, a fine of up to $5,000 can be imposed for each violation, which means that if the judge imposes the maximum penalty, the total cost could rise rapidly.
State government officials also requested that the court compel Meta to undergo independent security audits regarding its data practices. This is the second time in the past six months that a New Mexico jury has rendered a verdict unfavorable to Meta regarding user security allegations.
Recurring legal disputes may drag down the prospects of Meta's stock.
This ruling from New Mexico adds another chapter to the long-standing legal disputes surrounding platform security and user privacy involving Meta.
In March of this year, a jury in Santa Fe ruled that Meta should pay $375 million regarding child safety allegations; after the second phase of trials, this amount was later increased to $567 million.
Not long after, Meta agreed to pay up to $17 billion in a multi-state settlement covering 47 states and involving allegations of adolescent addiction. These recurring legal cases may erode the profit margins of Meta due to the continuously rising legal costs and the strict audits imposed by the courts.
The article states that despite Meta having strong annual cash flows and a dominant advertising business, continuous legal losses have brought uncertainty to investors. If judges compel Meta to change the way it uses personal data for targeted advertising, a decline in advertising revenue could further pressure Meta's stock price in the coming quarters.
Meta Is it a stock worth buying now?
According to the data from TipRanks, Meta Platforms ( META ) has currently received a unanimous "strong buy" rating based on the assessments of 45 analysts over the past three months. Among them, 39 analysts gave a "buy" rating, and 6 gave a "hold" rating. The average target price for META over the next 12 months is $796.11, which represents a potential increase of 5.9% from the current trading price.
