Quote:$25 billion. That's what a New Mexico judge ordered Meta to pay Wednesday over Facebook's privacy promises, after a September jury found more than 43 million violations of the state's consumer protection law. The state asked for as much as $40 billion. Apparently, this was the smaller bill.

State District Court Judge Francis J. Mathew laid out the problem in language that requires very little translation:

Facebook promised users that they (the users) controlled their data. This was false. Facebook's wrongdoing — over the course of years and systematically broadcast to the public — goes to the heart of Facebook's core business practices.

New Mexico filed suit in 2021. Behind it was the personality quiz that collected Facebook information reaching far beyond the people who took it. Data from up to 87 million profiles was harvested, with Cambridge Analytica obtaining information for political targeting. The firm’s clients included Trump’s 2016 campaign.

Facebook said it would investigate. Mathew found that the promised comprehensive investigation never happened. Senior executives pushed to keep costs down, resources were inadequate, and the investigative methods fell short. The judge called the inquiry “willfully ineffective.” The investigation Facebook promised became evidence against it.

There's a consumer protection argument there, and it's not a weak one. Tell people they control their information, then let third parties access it without their knowledge, and you've got a problem. Whether a $25 billion problem is another question, and the one Meta's lawyers will be pressing on appeal.

The penalty takes a little more explaining.

The violation count came from multiplying misleading statements by their potential audiences. Mathew concluded that state law supported penalties exceeding $219 billion, then reduced the amount to $25 billion. New Mexico wanted $35 billion to $40 billion. Meta argued for a maximum of roughly $3.45 billion.

One of the state’s lawyers, Randi McGinn, explained its approach at an October 1 hearing:

"This court should speak to Meta in the only language it understands, which is money, and the value of its stock price. For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law."

That invites a fair question: How much of this penalty reflects the violations, and how much reflects officials’ determination to produce a number investors will notice?

The multiplication will sound familiar to readers of our earlier coverage of Meta’s child addiction litigation. That separate case carried a demand for $1.4 trillion. Statutory penalties add up quickly when the audience runs into the millions.

Meta's chief legal officer, C.J. Mahoney, calls the New Mexico lawsuit "a tax on speech to enforce new rules for what people can say online. This ruling, and the Attorney General's approach to this enforcement, makes it all but impossible to do business in the state of New Mexico."

It's not a frivolous argument. Courts have pushed back on government attempts to police online content dressed up as consumer protection. Meta also argues the state never proved any consumer was actually harmed. Those arguments now have to clear a jury verdict and Mathew's findings, which won't be easy. But they're worth watching on appeal.

Worth noting what New Mexico was actually arguing: that Facebook's content moderation decisions on COVID-19 misinformation, hate speech, and other contested topics constituted consumer fraud. The jury rejected those claims. But the fact that a state AG brought them at all should raise flags. If courts can penalize platforms for how they moderate content, the pressure on those platforms to moderate more aggressively, and in whatever direction, keeps them out of court, becomes enormous. That's not a consumer protection story. That's a speech story.

New Mexico AG Raúl Torrez, a Democrat who has made Big Tech enforcement a signature of his tenure, called it a warning shot for Silicon Valley. He's not wrong that it sends a message. The question is what message state AGs with consumer protection statutes and a multiplication formula start sending next.

Now comes the appeal. Any penalty collected would go toward education spending, and getting the money could take years. New Mexico has $25 billion on paper. Putting it in the bank will take considerably longer.