Meta Platforms Inc. has reportedly engaged in discussions with state attorneys general from multiple U.S. states about a potential settlement during the ongoing trial of a high-profile lawsuit, according to sources familiar with the matter. The case, currently in its second week at a federal court in Oakland, California, accuses Meta of deliberately engineering Facebook and Instagram to be addictive for teenage users.

The trial represents a significant financial and reputational risk for Meta, with senior legal representatives from 29 states seeking substantial penalties and demanding forced changes to how the company operates its platforms. The sources, who requested anonymity due to the sensitive nature of the information, revealed that settlement talks have taken place, though a Meta spokesperson declined to comment on the matter.

Representatives from the California Attorney General's office also refused to comment, as did officials from three other states leading the lawsuit—Colorado, Kentucky, and New Jersey—who did not immediately respond to requests for input. The states allege that Meta violated state consumer protection laws and federal privacy regulations, with potential fines that could escalate rapidly when multiplied across the millions of young Instagram and Facebook users affected.

Meta Platforms Inc has denied the allegations and criticized the state attorneys general for demanding unreasonable design changes and "excessive compensation." According to Meta's own calculations, an unfavorable verdict could result in penalties up to $1.4 trillion—an amount approaching the company's total market value and unprecedented in legal history.

Should a settlement be reached, however, the final figure would likely be far lower than the maximum potential penalty, offering a possible path to resolve the case without the extreme financial consequences of a full loss. The outcome of these negotiations remains uncertain as the trial continues to unfold.