Meta AI Plans Could Be Crippled By Lawsuits
Meta is betting over $130 billion on AI infrastructure while facing a wave of lawsuits that legal experts are comparing to the landmark Big Tobacco cases. Whether those legal battles drain the resources fueling its AI ambitions is a question…
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As Meta (NASDAQ: META | META Price Prediction) claims an important foothold in the AI sector, it faces several legal actions that could badly damage its balance sheet, and perhaps even its ability to invest in chips and AI data centers. The most recent is a $40 billion action brought by the State of New Mexico over misleading customers on how their data was used. A jury has already ruled against the company.
Twenty-nine states are suing Meta over how it made money on children and teenagers using Instagram and Facebook by taking advantage of their psychological vulnerability. The lead attorney for the plaintiffs said, “There can be no dispute that Meta has both recognized that people can struggle with their use of social media and tried to come up with tools to help them.” If Meta loses this case, the likely penalty request will be in the billions of dollars. School districts are suing Meta for similar reasons.
Another suit brought against Meta and YouTube ended in a $4.2 billion penalty.
These suits have gone so far that The New York Times wrote, “The cases have been compared to those against Big Tobacco last century, when Philip Morris and R.J. Reynolds were accused of hiding information about the harms of cigarettes.” The penalty was $206 billion, and that was in 1998. The tobacco companies had to completely change how they marketed cigarettes. Judgments against Meta may change how it markets and designs Facebook and Instagram, which could hurt its revenue.
Meta said its capital expenditures, most of which will go to AI infrastructure, will reach between $130 and $145 billion. If industry forecasts are correct, that figure could actually rise over the next several years. Granted, some of this money may come from Nvidia. Some may come from Wall St. firms that want to cash in on the AI data center expansion. No matter which path it takes, Meta will have to put money on the table while also facing user lawsuits. And there is only so much money to go around, particularly when its rivals are investing as much as it is.
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A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.
TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.
McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.
