Meta Platforms is facing one of its most consequential legal battles as a federal trial examines allegations that Facebook and Instagram were designed in ways that encouraged compulsive use among young people and improperly collected information from children under 13.

The case is being heard before U.S. District Judge Yvonne Gonzalez Rogers in Oakland, California. California, Colorado, Kentucky and New Jersey are leading this test case, which is connected to broader litigation involving another 24 states.

Meta says the states’ approach could expose the company to penalties as high as $1.4 trillion. The attorneys general dispute Meta’s presentation of that figure. Crucially, Meta has not been fined $1.4 trillion; it is a disputed estimate of potential exposure if the states prevail.

Why Meta is on trial

The states argue that Meta developed features that kept younger users returning to Facebook and Instagram while benefiting commercially from their engagement. Infinite scrolling is among the features under scrutiny because it continuously delivers new content without requiring users to actively request another page.

California Deputy Attorney General Megan O’Neill also accused Meta of concealing internal research about negative experiences among young users and argued that some children struggled to disengage from its apps.

Meta rejects those allegations. Its attorney Paul Schmidt pointed to years of company research into teenagers’ experiences as evidence that Meta was trying to identify problems and improve its platforms.

One study discussed in court found that 20% of teens reported feeling worse after using Instagram. The states view such findings as evidence that Meta understood potential risks. Meta argues that studying those experiences demonstrates an effort to address them rather than ignore them.

Children under 13 are a major part of the case

The trial also focuses heavily on children younger than 13. The states allege that Meta knowingly collected information from underage users without parental consent.

Meta denies deliberately targeting those children. Schmidt said the company deleted approximately 1.4 million under-13 accounts over four years after detecting them.

CEO Mark Zuckerberg has also advocated app-store-level age verification, which would place some responsibility on app stores to determine whether users are old enough to download particular services.

Former Meta engineering director Arturo Béjar has become an important witness in the proceedings. He criticized Meta’s handling of underage users and alleged that the company effectively operated a “don’t ask, don’t tell” approach toward children under 13. Meta disputes his broader characterization of its safety practices.

The bigger risk may be changes to Instagram

The $1.4 trillion figure is grabbing headlines, but potential changes to Meta’s products could have longer-lasting consequences.

If the states prevail, Meta could face pressure to change how certain engagement features work for younger users, potentially including infinite scroll. Such an outcome could also influence scrutiny of TikTok, YouTube, Snapchat and other platforms built around recommendation systems and continuously delivered content.

The Oakland case comes after another major legal setback for Meta. Earlier this month, a New Mexico court ordered the company to pay $567 million toward addressing harms involving young people and another $375 million in civil penalties. The New Mexico Department of Justice said the combined judgment reached $942 million.

The New Mexico proceeding is separate from the current federal case and does not determine its outcome. More background on that ruling is available in our report on the $567 million Meta youth mental-health judgment.

Meta and YouTube also suffered a separate setback in March when a jury found both companies negligent in litigation involving a woman who began using their platforms at age 10. The companies were ordered to pay $6 million in punitive and compensatory damages.

Why META investors are watching closely

For shareholders, the key issue is not simply whether Meta eventually pays a large penalty. Restrictions affecting engagement features could create additional compliance costs and require product changes.

Meta’s advertising business benefits from enormous activity across Facebook and Instagram, so investors will be watching whether any remedies affect recommendations, scrolling or other features that influence engagement. Restrictions limited to younger users would not automatically translate into a significant revenue decline, however, and the trial has not established such an outcome.

The earlier legal pressure has already demonstrated how litigation can become part of the META stock story. Our analysis of Meta stock’s 7.98% decline following an earlier legal blow examined how courtroom risks have competed with AI spending and growth expectations for investors’ attention.

Zuckerberg could become a key figure

The trial is expected to continue for several weeks, with Mark Zuckerberg and Instagram chief Adam Mosseri among the prominent executives expected to testify.

Their appearances could provide more insight into what Meta’s senior leadership knew about youth safety concerns and how the company responded. Meta, meanwhile, is expected to emphasize its parental controls, privacy protections, account-removal efforts and other safeguards for teenagers.

Even if Meta loses, the dispute may continue through appeals. The lasting significance of the trial may therefore extend beyond the headline penalty: it could help establish how existing privacy and consumer-protection laws apply when social-media companies design engagement-focused products used by children and teenagers.