Meta agrees to $17 billion deal, pushing new industry standards on child safety
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Meta agreed to settle with U.S. states for up to $16.7 billion in a landmark deal over allegations Facebook and Instagram were designed in ways that harm children.
- The company is calling on its peers to sign on to the pact as well, saying it won't work unless they jointly line up behind broad reform.
Why it matters: This is social media's version of the landmark 1990s tobacco settlement, a settlement that effectively reshapes the industry and the way young Americans experience some of their favorite platforms.
Driving the news: Meta agreed to provide compensation to the states for a variety of public health purposes, including crisis intervention services, after-school programs, outdoor activities and youth mental health programming.
- Meta also agreed to limited under-18 users to 2 hours per day on Facebook and Instagram, block them from accessing the platforms from midnight to 6 a.m., and limit notifications to them during school hours.
- Youth will also be given the option to have a chronological feed, not an algorithmic one — and parents can make it the default option.
- Kids also won't be able to see likes and other reactions on posts.
The intrigue: Alongside the settlement, Meta issued an open letter to TikTok and YouTube calling on them to join in the deal.
- "We want to ensure teens benefit from this new industry standard, but we cannot do it alone. These protections will only be truly effective if we work with our peers - TikTok and YouTube - to put the same measures in place," the letter says, per a source to Axios.
- "All platforms should empower parents and support teens in these ways because we know that when teens are restricted on one app, they simply move to another. For meaningful progress to happen, we urge our peers to join us."
About $5 billion of the Meta settlement kicks in only if YouTube and TikTok also settle with states on two conditions:
- Imposing a one-hour daily usage limit, night restrictions, and age assurance features;
- Paying about $5 billion each.
By the numbers: Meta shares edged up slightly after the deal.
- Investors had been bracing for the possibility of a much larger payout if the ongoing trial went to a jury verdict, with penalties ranging up to $1.4 trillion.
- The company said it expects to take a $10 billion charge in the current quarter for the settlement, which was not part of its prior guidance.
Follow the money: At roughly $17 billion, the Meta settlement is on par with historic federal civil settlements like the Volkswagen "Dieselgate" scandal and the BP Deepwater Horizon deal.
- But it's a small fraction of the 1998 tobacco deal, under which states collected more than $200 billion.
The other side: "This is not just about money — it's about changing how these platforms operate so they stop exploiting the developing brains of our kids," Indiana Attorney General Todd Rokita said in a statement.
- "Indiana will continue working with other states to secure similar protections from companies like Discord, Roblox, Snapchat, TikTok, and YouTube. Our children deserve better, and we will keep fighting until they get it."
What's next: The deal is expected to end the trial with a judge's approval.
This is breaking news. Check back for updates.
