It took a jury one day to decide what whistleblowers, parents, and prosecutors have been saying for years: Meta knew its platforms harmed children, and the company covered it up.

A New Mexico jury on Tuesday found Meta liable on all counts for violating state consumer protection laws, ordering the company to pay $375 million in civil penalties. The verdict marks the first time a state has prevailed at trial against a major technology company over child safety — and it opens a door that could reshape how social media platforms are regulated in the United States.

The jury found Meta willfully misled users about the safety of its platforms and engaged in “unconscionable” trade practices that exploited the vulnerabilities of children. Jurors imposed the maximum penalty of $5,000 per violation across 37,500 violations.

What the Trial Revealed

The six-week trial in Santa Fe laid bare internal Meta documents and testimony that painted a damning picture. Former Meta engineering director Arturo Bejar testified about warning executives after his own 14-year-old daughter received sexual solicitations on Instagram. The algorithms that make Meta’s platforms successful at serving ads, he explained, work equally well for predators.

“The product is very good at connecting people with interests, and if your interest is little girls, it will be really good at connecting you with little girls,” Bejar told the court.

Former Meta Vice President Brian Boland testified that he “absolutely did not believe that safety was a priority” to CEO Mark Zuckerberg and then-COO Sheryl Sandberg when he left the company in 2020.

New Mexico Attorney General Raúl Torrez, who brought the lawsuit in 2023, said the evidence showed Meta executives “knew their products harmed children, disregarded warnings from their own employees, and lied to the public about what they knew.”

The Undercover Operation

Prosecutors built their case partly through an undercover investigation. State investigators created fake Facebook and Instagram profiles posing as children — and documented what happened next.

The decoy accounts were flooded with sexually suggestive content and solicitations. Three New Mexico men were arrested in May 2024 after arranging to meet what they believed was a 12-year-old girl at a motel. Two of them showed up.

Meta’s attorneys questioned the ethics of the investigation, accusing prosecutors of using hacked or stolen accounts and photos of real children without consent. Torrez called those criticisms a “distraction.”

A Fractured Defense

Meta’s legal team argued that the company has been honest about the challenges of content moderation and employs 40,000 people focused on safety. Instagram head Adam Mosseri testified that Meta has rolled out safety features despite their negative impact on growth and engagement.

But the jury wasn’t persuaded. They found Meta had failed to disclose what it knew about problems enforcing its ban on users under 13, the prevalence of content about teen suicide, and the role of algorithms in prioritizing harmful content.

“We respectfully disagree with the verdict and will appeal,” a Meta spokesperson said in a statement. “We remain confident in our record of protecting teens online.”

What Comes Next

The $375 million penalty is substantial, but it’s a fraction of what prosecutors sought — closer to $2 billion — and barely registers against Meta’s $1.5 trillion market cap. The company’s stock rose 5% in after-hours trading following the verdict.

The more significant threat comes in phase two. On May 4, a judge — not a jury — will consider whether Meta’s platforms created a public nuisance. New Mexico prosecutors will seek injunctive relief that could force the company to implement effective age verification, remove predators from platforms, and restrict encrypted communications that shield bad actors from law enforcement.

“One of the things that I am really focused on is how we can change the design features of these products, at least within New Mexico, and that would create a standard that could then be modeled elsewhere in the country, and, frankly, around the world,” Torrez told CNBC.

The Bigger Picture

This verdict is the first domino in a line of cases against social media companies. In Los Angeles, a jury has been deliberating for more than a week in a bellwether trial accusing Meta and YouTube of harming a young woman’s mental health through addictive design features. More than 40 state attorneys general have filed similar lawsuits against Meta. Hundreds of cases from school districts and individual families are working through courts.

For years, tech companies have been shielded from liability under Section 230 of the Communications Decency Act, which protects platforms from being held responsible for user-posted content. New Mexico’s legal strategy — focusing on platform design rather than content — found a way around that defense.

“New Mexico is proud to be the first state to hold Meta accountable in court for misleading parents, enabling child exploitation, and harming kids,” Torrez said in a statement.

Whether that pride translates into lasting change depends on what happens in May — and whether other states follow New Mexico’s blueprint.

Sources