Meta agreed in August to pay up to $18 billion to resolve a multistate lawsuit brought by 52 attorneys general representing states, the District of Columbia, and U.S. territories. The lawsuit alleged that Facebook and Instagram were designed in ways that harmed children and teenagers. Meta denied the allegations and did not admit wrongdoing or liability, but it agreed to make the payments and implement new teen protections on Facebook and Instagram, including default time limits, overnight access restrictions, and expanded parental controls.
While attorneys general are claiming the settlement as a victory, its practical value should be judged by whether states use the money to expand timely mental health and crisis care, help young people and families respond to online harm, and improve youth safety and well-being. Without dedicated accounts, public reporting, and grants tied to those results, the settlement could allow officials to point to the agreement as an accomplishment without showing that the money improved care, safety, or well-being for young people.
Past big government settlements have fallen short
Large government settlements like these often begin with a clear public purpose but become detached from those goals once the money enters state budgets. Meta will make guaranteed payments of roughly $12.7 billion to participating states over 10 years, while an additional $5.3 billion depends on whether TikTok, Snapchat, and YouTube accept comparable terms. That extended payment schedule gives future governors and legislatures substantial discretion over how to spend the money. This discretion creates the same kinds of mismanagement seen after the tobacco, mortgage, and opioid settlements.
In 1998, the tobacco Master Settlement Agreement sent states hundreds of billions of dollars after they sued cigarette manufacturers to recover smoking-related healthcare costs. Although the agreement was widely associated with reducing youth smoking, it did not require that states spend proceeds on prevention, cessation, or treatment. This lack of restrictions allowed states to divert the money to debt service, general budget needs, and other priorities. In fiscal year 2026, states are projected to collect $21.7 billion from tobacco-settlement payments and tobacco taxes while dedicating just 3.4 percent of that revenue to tobacco-prevention programs.
The 2012 National Mortgage Settlement offers a similar warning. The settlement directed $2.5 billion to states for foreclosure prevention, legal assistance for homeowners facing foreclosure, and other efforts to address the foreclosure crisis. State attorneys general negotiated the agreement and received or directed the state payments. Because the settlement did not require states to use the money for housing-related aid, less than half of states’ settlement money had been allocated to housing six months later, while substantial sums went straight to states’ general revenue funds to close budget gaps and pay for unrelated state programs. Without legal safeguards, money from the Meta settlement could similarly shift from youth safety initiatives to becoming ordinary state revenue.
A second pitfall is spending that loosely connects to the harm but has little evidence of benefit. The 2021 and 2022 national opioid settlements generally direct most proceeds toward opioid remediation. Their remediation categories cover a broad range of uses, and public reporting has been inconsistent across states and localities. In Irvington, N.J., officials spent $632,000 in opioid settlement money on two “opioid awareness” concerts, but their promotional materials advertised performers instead of addiction, treatment, or recovery resources. In Louisiana, a panel of addiction and public-health reports found that about $5.4 million of sheriffs’ reported settlement spending was inappropriate in areas such as homicide detective salaries and jail contraband searches. While both of these are law enforcement functions that may touch drug crime, neither directly addresses opioid addiction.
A 2025 survey found that only three states described a specific process for reporting suspected misuse of the funds. Without clear spending rules and consequences for recipients that cannot account for lost money, states cannot ensure settlement payments serve their intended purpose.
The settlement also separates the officials who secured the money from those who will decide how to spend it. Attorneys general can point to the proceeds recovery as an accomplishment, but governors and legislators, including officials who will take office years later, will determine how each installment is allocated, all while facing any number of budget pressures. Only about 70 percent of the settlement total is guaranteed, and states should avoid making long-term commitments that depend on money that may never arrive.
How states can avoid potential misallocation
States should keep Meta settlement proceeds out of general revenue and away from vague “remedial purposes.” Each state should establish a legally restricted account focused on youth online safety and well-being that receives every payment made to the state and retains any interest it earns. The account should remain separate from an attorney general’s operating budget and protected from transfer to a state’s general fund. Its expenditures should also be subject to a general appropriation or other transparent process that prevents governors and legislators from repurposing it for ordinary annual budget needs. States already use comparable structures, such as New York’s Opioid Settlement Fund, which holds litigation proceeds and limits appropriations to defined prevention, treatment, recovery, and harm-reduction purposes.
Settlement money could support youth behavioral health services, school counseling, crisis response, telehealth, and training for educators and care providers to recognize online exploitation, harassment, and coercion. For example, a rural Alaska school district uses telehealth to provide individual and group counseling, crisis assessments, classroom lessons, and staff training in communities with few mental healthcare providers. States could fund grants to counseling providers, victim-service organizations, schools, and family-support programs that help young people and families affected by online abuse. Those grants could pay for counseling, caseworkers who help families preserve evidence and file reports, and referrals to the national CyberTipline, state child-protection agencies, Internet Crimes Against Children task forces, or local law enforcement. Other grants could expand supervised in-person activities such as after-school programs, youth sports, and community service, particularly where cost or transportation limits access. These activities can strengthen connection and reduce isolation, but they should complement, not replace, clinical care and crisis support.
The account should add to, not replace, existing spending on youth mental health, school counseling, and child protection. Each year, the state could divide its settlement payment among statewide services, grants to local communities, and independent evaluation. A lead agency could invite schools, local governments, health providers, and nonprofits to apply for funding for specific projects, such as hiring school counselors, expanding access to telehealth, or helping families obtain support after online exploitation. Every award should identify the amount, purpose, population served, and results expected.
The effectiveness and impact of spending needs to be tracked. At the end of the year, organizations that receive Meta settlement money would report to the state how much they received, how they spent it, what services they offered, and what results they achieved. They would need to keep the money separate from their regular budget, either in its own account or through clear records.
Smaller organizations could provide bank statements, receipts, and a brief report. Larger school districts, hospital systems, or statewide contractors receiving a major award should undergo a more detailed independent review of spending and program records. If an organization is missing reports, the state could hold back future payments or require repayment if it cannot show where the money went or if it was spent on an unapproved purpose. These safeguards draw on accountability ideas proposed for opioid settlement money, including separate accounts, clear spending rules, public reporting, and penalties for misuse.
States should maintain a searchable public record of every settlement payment, budget allocation, grant, recipient, contract, audit, progress report, and dollar left unspent. The public should be able to see, for example, whether a county received money for school-based counseling, how much it spent, how many young people obtained services, and whether an independent review found that the program delivered what it promised. They should also set aside some funding for independent reviews and short-term test programs. States can then expand, improve, or end programs based on whether they make it easier for young people to get care, respond to online harm, or stay safer online.
Meta’s settlement has imposed new restrictions for teen users of Facebook and Instagram and will deliver billions of dollars to participating states. Whether the government’s case against Meta converts into a meaningful win for young people will depend on whether lawmakers protect the settlement money, make its use visible to the public, and continue funding only programs that deliver measurable improvements in care, safety, and well-being. Otherwise, the settlement’s most lasting achievement may be its initial headlines and the political windfall for various candidates’ campaigns.