In August 2026, Meta Platforms Inc. (Meta) agreed to settle a 3-year long class action brought by a group of 29 US states for approximately US$17 billion following allegations that Facebook and Instagram were intentionally designed to be addictive to children and teenagers. The settlement also resolved the remaining Cambridge Analytica privacy claims brought against Meta for data harvesting through an external app in 2018.

Meta are required to make the payment through annual instalments over a 10-year period, with the funds going to various online safety initiatives as nominated by the recipient states.

Although touted as a “historic” win for child online safety, concerns have been raised as to whether the settlement will actually cause Meta to change their harmful business practices, or if this is merely another small step on the path to meaningful reform.

The 2023 Class Action

The class action against Meta arose in 2023 amidst allegations from US State Attorney Generals that Facebook and Instagram had used features such as endless scrolling and oppressive algorithms in order to maximise user engagement.

The matter went to trial in the US District Court on 18 August 2026 before Judge Yvonne Gonzalez Rogers. Following a week of evidence and witness testimony, the parties were able to reach a negotiated settlement requiring Meta to pay approximately US$17 billion over a 10-year period.

Meta will be required to implement new measures to Instagram and Facebook in addition to the US$17 billion payment, including:

• A default 2-hour limit on children’s use of the platforms;
• A “school-mode” which turns off social media notifications during the school day and after midnight;
• A ban on the use of certain photo filters for underage users; and
• Strengthened age-verification procedures.

Parents will have the option to disable many of the incoming changes, making them effectively optional.

Meta did not admit liability or wrongdoing as part of the settlement, and US$5 billion of the sum is contingent on whether other social media companies, including TikTok, Snapchat, and YouTube, also agree to subject themselves to the same youth-protection obligations.

Cambridge Analytica Data Harvesting Claims

In 2018, it was alleged that Meta (Facebook at the time) had mishandled data from more than 87 million Facebook users. The data was taken from an external app and provided to the political data analytics firm Cambridge Analytica.

The external app used to gather the data, called ‘This Is Your Digital Life’, was a personality quiz which extracted data not only from the app’s users, but also their friends’ Facebook profiles, resulting in the collection of a massive amount of data. The data collected by the app included the person’s location, interests, birthday, and more. The information was then used by Cambridge Analytica to create a psychographic profile of each user which could indicate what form of political advertisement would be the most effective against them.

The Federal Trade Commission ultimately handed down a US$5 billion fine to Meta for the offence, however various claims surrounding the inappropriate provision of data to Cambridge Analytica remained on foot and were later absorbed into the August 2026 settlement. US$459 million from the settlement amount is attributed to resolving these remaining proceedings.

What does this mean?

Viewed as a whole, the changes arising from this settlement seem substantial. However, when considering that the “historic” sum of US$17 billion does not even match half of the company’s US$60.8 billion in profits from the last quarter alone, it stands to be seen whether this settlement will result in the change that many have been demanding for over a decade.

Also of note is that none of the incoming reforms actually require Meta to change their core business model: the collection of data for the use of targeted advertising and engagement-driven algorithms. This means that many of the harmful effects of Meta’s practices will remain unaddressed, including those arising from the Cambridge Analytica data harvesting scandal.

It is yet to be seen whether this “historic” settlement will truly improve children’s online safety, or whether it is simply the cost of doing business for one of the world’s most profitable technology companies. Regardless, the results of this class action should not be under appreciated – they have shown that even the largest technology companies are not immune from accountability when children’s online safety is brought into question.

Danielle Snell, Managing Partner & Co-Founder | [email protected] | 0401 812 885

Robert McGirr, Partner & Co-Founder | [email protected] | 0413 944 023

Article co-authored by Kieran Bull, Law Graduate at Elit Lawyers