A U.S. court ordered Meta to pay $567 million to establish a fund to mitigate the negative impact of social media on youth.

A New Mexico court ordered Meta to pay $567 million into a compensation fund, citing its platform's contribution to youth mental health. Meta disagrees and is preparing to appeal.

On August 7, 2026, at 8:28 AM, CNBC reported that a New Mexico court ordered Meta, the parent company of Facebook and Instagram, to pay $567 million into a fund to mitigate the impact of social media. The court determined that the company's platforms significantly contributed to mental health issues among the state's youth.

The order is part of a child safety lawsuit Meta is facing and follows a previous jury ruling that the company intentionally violated New Mexico's unfair trade practices law, resulting in a $375 million civil fine. Combined with the latest $567 million in compensation payments, Meta's total financial burden from both rulings amounts to $942 million.

Judge Brian Bedchild, in his ruling, stated that while Meta was not the only company involved, its social media platform was a significant factor contributing to mental health issues among youth in New Mexico. Evidence and expert testimony presented to the court supported a causal link between social media use and these problems.

Of the $567 million fund, $420 million will be allocated for care and assistance to those affected by the platform. The remaining funds will be used for awareness and prevention, screening and assessment, referral and coordination, as well as improving the quality and evaluation of measures.

This case has garnered significant attention in the tech industry, as it is one of several lawsuits facing Meta and other major social media companies regarding allegations of their platforms' impact on children and youth. Some experts have even compared the situation facing the social media industry to a "Big Tobacco" period, similar to the tobacco industry in the 1990s when major cigarette companies were sued and had to pay huge sums of money due to issues concerning the product's impact.

New Mexico Attorney General Raul Torres, who filed the lawsuit against Meta in 2566, stated that the ruling holds the company responsible for the damages caused to children, families, and schools in the state, and mandates changes to Meta's operations in New Mexico.

In addition to making payments into the fund, the court also ordered Meta to proceed with improving its system and tools for assessing user ages in New Mexico using AI, including attempting to develop a specific model to predict whether users are under 13 years old within two years.

Meta also needs to make it easier to report accounts suspected of having underage users and collaborate with schools or child safety organizations to create a channel for school administrators to report accounts suspected of having users under 13 years old.

However, the court did not order Meta to change its platform's algorithms, as this might violate protections under Section 230 and the First Amendment of the U.S. Constitution, nor did it order the company to cease using end-to-end encryption on Facebook.

The judge also stated that WhatsApp does not constitute a cause contributing to the public issue being considered by the court, as the platform does not have a system for recommending malicious users or harmful content to minors in the same way.

Meta disagrees with the ruling and announces it will appeal. The company states that it has continuously taken measures to ensure user safety and remains confident in its measures to protect teenagers on its platform.

However, Meta's legal risks in this case may not be over, as the company revealed in its second-quarter earnings document that the New Mexico Attorney General had indicated it would seek up to $62.85 billion in fines in this case.

Reference: www.cnbc.com

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