Meta, the company behind Facebook, Instagram and WhatsApp, has been ordered to pay $25bn (£18.6bn) – the largest penalty in its history – after a US judge ruled it had spent years misleading the public about how it handled users’ personal data.

Judge Francis Mathew, sitting in New Mexico, issued the order on Wednesday following a two-week trial earlier this year. He said the company’s misrepresentations were “willful”, spanned more than 11 years from 2010 to 2021, and went to “the heart of Facebook’s core business practices”.

Meta said it would appeal. Its chief legal officer, CJ Mahoney, said the ruling made it “all but impossible to do business in the state of New Mexico” and predicted the appeal would succeed.

From Cambridge Analytica to the courtroom

The case grew out of the Cambridge Analytica scandal. The political consultancy used data drawn from millions of Facebook profiles in its work, including on the 2016 US presidential election that first brought Donald Trump to power.

New Mexico’s lawyers built their case around repeated public statements by Meta executives that user data was never shared with, or accessed by, outside parties without permission. The state argued that this was untrue and that its entire population of about two million people had been affected.

A jury found that Meta had broken state law more than 40 million times. Jurors also found that the company had intentionally misled the public about how it benefited from content containing hate speech and how it enforced its own rules against such material – accusations Meta disputes.

In his order, the judge wrote that communications between senior executives, including the chief executive Mark Zuckerberg, had been “designed to mislead the public”.

How the figure was reached

The state had sought up to $40bn. Meta argued that anything above $3.4bn would be unconstitutional. Calculated violation by violation, the theoretical maximum penalty reached $219bn, but the judge reduced it to $25bn – roughly what the company earns in a single quarter.

“For too long, powerful technology companies have operated as though their size and influence put them beyond the reach of the law,” said New Mexico’s Attorney General, Raúl Torrez. “Today’s result makes clear that no corporation is too powerful to be held accountable.”

Mr Mahoney rejected that view. “At its core, this lawsuit seeks to impose a tax on speech to enforce new rules for what people can say online,” he said.

A year of legal blows

The ruling is the latest in a string of costly cases for Meta. Earlier this year it agreed an $18bn settlement with California over child safety, and New Mexico separately fined it almost $1bn for misleading the public about the safety of its platforms for children. The judge in that case compared the company to an industrial polluter, describing the harm as psychological damage and the sexual exploitation of children.

The new penalty dwarfs the $5bn fine imposed by the US Federal Trade Commission in 2019 over Meta’s privacy practices, which was then a record for a technology company.

For users in Scotland and the rest of the UK, the case does not change any rules directly, but it adds to pressure on regulators on both sides of the Atlantic over how social media companies collect and use personal information.

Spending more than it earns

The fine landed on the same day Meta reported quarterly results showing its heavy bet on artificial intelligence. Revenue for July to September rose 26% on a year earlier to $64.5bn, and profits tripled to $9.8bn.

Yet the company reported negative cash flow of more than $2bn – apparently a first since it floated on the stock market 14 years ago, according to a BBC review of its filings. In other words, Meta is now spending more than it brings in, even as it earns more than ever.

Meta expects to spend at least $135bn this year, mostly on AI, and possibly as much as $145bn. Mr Zuckerberg told analysts that its consumer AI assistant, Muse, already had 10 million users. “Growing Muse to serve billions of people is both our mission and our strategy,” he said.

The chief financial officer, Susan Li, announced a stock split under which existing shareholders will receive one new non-voting share for each share they hold. She said the new class of stock was not earmarked for a particular deal, but pointed to continuing AI costs and said the company could use “more funding flexibility” next year.

Investors will now be watching both the appeal and whether the scale of the New Mexico penalty encourages other US states to pursue similar cases.