Meta has agreed to pay 16.7 billion dollars to settle a landmark federal case brought by a coalition of state attorneys general who alleged the company misrepresented the mental health harms its platforms cause to children and teenagers.

The settlement was revealed in a court filing on Wednesday, during the second week of a trial at Oakland’s federal courthouse. The case is co-led by California Attorney General Rob Bonta alongside counterparts from Colorado, New Jersey and Kentucky, representing a bipartisan group of 29 attorneys general. It stems from a 2023 lawsuit targeting Facebook and Instagram.

A proposed consent judgement sets out a range of changes Meta must make to its platforms, including daily usage limits and nighttime blocks for teenage users, enhanced age verification measures and new tools for parents and guardians. California alone could receive between 1.5 billion and 2.1 billion dollars if the court formally approves the agreement, according to Attorney General Bonta.

Meta’s share price climbed around five per cent in premarket trading after the news broke. Once a court issues its final judgement, all parties waive their rights to appeal under the terms of the filing.

The case carried unusually high stakes for the Mark Zuckerberg-led company. The trial was taking place in Meta’s home state and involved co-ordinated action across nearly three dozen states. Instagram chief Adam Mosseri testified on Tuesday, addressing allegations around the withholding of child safety and product information.

The settlement lands at a moment when legal and regulatory pressure on social media platforms over their responsibilities towards younger users has been building steadily, across the United States and beyond. Whether Wednesday’s agreement becomes a template for further action against the industry remains to be seen, though the scale of the payout and the breadth of the required platform changes suggest regulators are finding firmer ground.