New Mexico Catfished Meta with a Fake 13-Year-Old and Just Cashed the Sting In for $567M

Zuck around and find out… 

Meta's wallet is officially having a worse week than you. A New Mexico judge just ordered Zuck and the boys to one-pump-chump $567 million into a fund to clean up the damage its apps have done to the state's kids, ruling that Instagram and Facebook are a "significant contributing factor" to New Mexico's youth mental health crisis.

Friendly reminder, that $567 million lands on top of the $375 million penalty a Santa Fe jury hit Meta with back in March, when it found the company willfully violated the state's Unfair Practices Act… 75,000 times. Quick math: that's a $942 million tab in a state with roughly 2 million people. Woof.

So how did we get here, you ask? Well back in 2023, Attorney General Raúl Torrez went full Chris Hansen as his office built a fake Instagram profile of a 13-year-old girl, and the account was promptly "inundated with images and targeted solicitations" from child predators. Torrez sued. In March, New Mexico became the first state in America to take a Big Tech company to trial and win. 

Which means Thursday's ruling puts numbers on the cleanup. Most of the abatement fund (all $420 million of it) is earmarked for treating kids harmed by the platforms, with the rest going to prevention, screening, and referrals, because the judge found New Mexico doesn't have anywhere near enough youth mental health services to handle the fallout. Which to be fair, is honestly an impressive win. How so? Because this was a "public nuisance" case (the weapon usually pointed at factories dumping sludge into rivers, not at apps), so the state had to prove an algorithm can wreck a community the same way a chemical spill can. It did, and now experts are calling this social media’s “Big Tobacco moment”... and the tobacco guys spent the back half of the '90s writing billion-dollar checks and watching their influence evaporate.

Oh, and to add insult to injury, Meta also has homework to keep improving its AI-powered age verification in New Mexico, build a model within two years that can sniff out under-13 users, and stand up a portal where school administrators can flag suspected underage accounts. What's NOT on the list though, is the recommendation algorithm. Judge Bryan Biedscheid ruled that forcing changes there could trip over Section 230 and the First Amendment… and encryption, which survives untouched. 

WhatsApp got a full hall pass because it doesn't recommend content to teens. Which pretty much tells you the algo was the problem all along. But alas, Meta, for its part, disagrees and plans to appeal, saying it remains "confident in our record of protecting teens online." (Read: Lawyer up a$$hole.) And honestly, it might be feeling luck as Torrez had signaled he'd seek up to $62.85 billion in penalties while Biedscheid went all Pawn Stars with a “best I can do is $567 million”. 

And yet, Meta pulled in $60.8 billion in revenue last quarter, so the entire New Mexico tab works out to about a day and a half of sales. Regardless though, the timing is chef’s kiss terrible. Meta is riding an 11-day losing streak that torched $17.8 billion of Zuck's net worth, free cash flow ate sh*t last quarter (down 91%), and the company spent earnings season hyping…. of all things… an AI bedtime-stories app. 

The same tech that tucks your kids in at night, brought to you by the company a judge just ruled is hurting them. Place your bets accordingly, friends. Until next time… 

At the time of publishing, Stocks.News holds positions in Meta as mentioned in the article.