Meta has lost jury trials, agreed to pay billions to settle claims about harm to children and watched its chief executive become the lead character in a Hollywood drama. Its apps are still growing. Revenue is still rising. And last month the company launched an AI assistant that has already passed five million downloads.
That mix of legal defeat and commercial strength sets up the question facing Mark Zuckerberg’s company: can it persuade people to hand over their most personal data to a new product when so many of them say they no longer trust the business behind it?
A keynote without Instagram or Facebook
Zuckerberg was three minutes into his keynote at Meta Connect, the company’s annual product event, when his tone turned wistful. The event took place on Wednesday 23 September in Menlo Park, California.
“Building is an act of love,” he told hundreds of analysts and developers, glancing at the ground with his hands in his pockets. “It’s how we impart what we believe, and we pour our hearts and our souls into what we make.”
He then moved to the products. Meta showed Muse, a new agentic chatbot, along with several new smart glasses and a Tamagotchi-like AI gadget that users attach to their wrists. The device, called the Muse Charm, lets people talk to the assistant.
The presentation lasted nearly an hour. In that time Zuckerberg did not mention Instagram or Facebook, two of Meta’s most popular products and the platforms that helped build a $2tn company.
The omission fits the year Meta has had. For much of the past 12 months the company has been tied up in legal actions that accuse it of designing products that are addictive to young users. Those cases have put internal emails, corporate documents and whistleblower testimony into public view. Personal injury lawyers and prosecutors across the country have used that material to build their arguments.
A film adds to the pressure
Zuckerberg is also unpopular with the public. A Pew Research Center poll last year found that two-thirds of Americans held an unfavourable opinion of him.
This week a new film brings the allegations to a mainstream audience. The Social Reckoning, a film by Aaron Sorkin, is built on whistleblower claims that Meta executives knew their products were harming young people. Jeremy Strong, known for the television drama Succession, plays Zuckerberg. A review in the Hollywood Reporter described the character as a “full-on villain”, “stoically arguing that even the slightest gesture of responsibility is anathema where money is concerned”.
Some observers speculate that this is Meta’s “Big Tobacco” moment, with opinion turning against the company and against the social media industry as a whole. The commercial evidence points in a different direction, as the figures below show.
A year of court losses and settlements
The list of legal setbacks is long, and the money involved keeps growing.
Last summer, Reuters reported that Meta had allowed its chatbots to “engage a child in conversations that are romantic or sensual”, and to give users false medical information. Meta has since revised those policies and said such responses should never have been allowed.
This year brought verdicts. In March, a jury awarded $6m (£4.5m) to a 20-year-old California woman who said her use of Meta’s Instagram and Google’s YouTube damaged her mental health. Around the same time, New Mexico became the first state to win a lawsuit against Meta over child safety. The jury found the company had failed to warn the public about the dangers its platforms posed to children. Meta was fined $942m in total, and the judge called the company a “public nuisance” akin to air pollution. Meta says it disagrees with both verdicts and is appealing.
Other cases ended before a verdict. In May, Meta was one of several social media companies that avoided a trial by settling a claim from a Kentucky school district. The district argued that product design had caused a youth mental health crisis. Meta reportedly agreed to pay $9m, the most of any defendant.
The largest settlement came this summer. Meta agreed to pay $18bn to 48 US states, the District of Columbia and three US territories. The company denied wrongdoing. During the five-day trial it argued that it had spent years making its platforms safer for young users and had put resources into testing and research.
The deal carries conditions. Meta promised two-hour daily time limits for young users, night-time blocks on use, muted notifications during school hours and other changes.
On 25 March, campaigners and families gathered outside the Los Angeles Superior Court to react as a jury found Meta and YouTube liable in a social media addiction trial.
More cases are coming. One begins later this month in Los Angeles, also over alleged social media addiction among young users. Outside a courthouse in Oakland on 18 August, family members held a banner with the names of nearly 400 young people who they say died from the effects of social media. Meta disputes many of the claims made in these cases.
Set against Meta’s earnings, the fines look different. The $942m New Mexico penalty equals about 6% of the $15.9bn the company earned in one quarter. The $9m paid in Kentucky is small at that scale. Only the $18bn settlement approaches a full quarter of profit, and it came with conditions on how the company runs its products for young people rather than a ban on any of them.
Adding up the figures reported here (the $942m fine, the $6m jury award, the reported $9m Kentucky payment and the $18bn settlement) comes to just under $19bn. That total is our own arithmetic. Some of it remains under appeal, and Meta has not accepted liability in the settlements.
The public mood is hostile
Outside the courtroom, attitudes toward social media have hardened. Several countries have moved to ban social media for children entirely, with Australia going first last December.
A Reuters/Ipsos survey found that 85% of Americans think social media can be addictive for children, and 61% support greater government oversight. Social media companies are broadly disliked, even though their products remain wildly popular.
The survey results sit beside the usage figures without matching them. A large majority of Americans believe social media can be addictive for children, and Meta’s own apps keep gaining users. Both facts can be true at once, because opinion about an industry and the habit of opening an app are not the same thing.
Alison Taylor, an associate professor at New York University’s Stern School of Business, thinks the damage runs deep. “Once the public has stopped trusting you, it’s kind of a downward spiral,” she said.
“It feels like… the trust deficit is so big, I just don’t know that they’re going to be able to recover,” she added.
Reading the usage and revenue figures together
Two numbers in Meta’s latest results sit awkwardly beside the legal record. Usage of some of its apps rose 3% year on year, while revenue rose 28%. Income is growing nearly ten times faster than audience, by our division of the two figures. The 3% covers only some of the apps, so the comparison is rough, but it shows that Meta is earning more from the people it already has.
That gap helps explain why the courtroom losses have not changed the company’s trajectory so far. A fine or a settlement is a one-time payment. Advertising revenue arrives every quarter, and it has kept arriving.
What the business results show
Meta’s results do not read like those of a company in decline. The apps with the rising usage include Instagram and WhatsApp, and second-quarter revenue was up 28% on the same period in 2025.
In the second quarter, Meta reported $60.8bn in revenue and $15.9bn in profit. That works out to a profit margin of about 26%, based on our calculation. The profit for that single quarter came to roughly nine-tenths of the $18bn settlement with the states.
The settlement itself was widely seen as a win for the company. It kept some Meta executives, Zuckerberg among them, from giving testimony. It stopped the release of further internal documents. It let Meta avoid admitting wrongdoing. Meta’s share price rose 4% right after the announcement and is up more than 25% over the past month.
Teenagers are the group the settlement affects most, and Meta says they matter less to its finances than the headlines suggest. The company has said that teens account for less than 1% of its revenue. TikTok and Google’s YouTube are more popular with young users in any case. Many brands eagerly court teenagers to build a future customer base, so agreeing to temper that pursuit is a real concession, but the company says it costs little today.
One view popular among critics holds that Meta has tested how much bad behaviour consumers will tolerate, and that its business has so far withstood the blowback. People keep using the products even if they dislike the company.
Patrick Moorhead, founder and CEO of Moor Insights & Strategy, said Meta’s position surprised him. “I think they’re in a remarkably good position that I didn’t expect them to be in,” he said.
He follows the technology industry for a living and did not expect this outcome. Critics predicted a reckoning. The financial results so far have not delivered one.
Why Muse is a different kind of product
Instagram and Facebook ask users for their attention. Their feeds run on what people look at and tap. Muse asks for something else: login-level access to a person’s email, payment cards and shopping history. The critics’ argument is that disliking a company is easy to live with when the product only needs your time, and harder when it needs your credentials.
That difference matters because the trust deficit that Taylor describes has not yet cost Meta users. Whether it costs Muse users is untested. The early figures lean toward Meta, and the reports of the agent reading emails, which Meta disputes, are the first sign of how fast a privacy complaint can attach itself to the new product.
Muse puts the trust question to a test
Meta’s move into AI depends partly on rebuilding public trust, and Muse is where that test begins.
The company launched the Muse personal assistant app last month. Muse is an AI agent, which means it can carry out tasks in several stages and keep working on something for hours. Chatbots such as ChatGPT tend to handle one task at a time. According to the BBC’s report, Muse is the first AI agent from a major technology firm to become publicly available.
One early user reports that it works. A tech reporter at the New York Times used the app for two weeks and said he was “blown away”. The app called his dental insurer for him, ordered his groceries and tracked his credit card spending in a spreadsheet.
Adoption figures back that up. Muse has passed five million downloads and more than three million weekly active users since launch one month ago. By our calculation, about 60% of the people who downloaded it are using it every week. Meta’s numbers also outpace the adoption of ChatGPT when that service first launched in the North American market.
The product is also a bet on a second device. Meta is pairing the software with hardware, including the wrist-worn Muse Charm and its smart glasses, so users can reach the assistant hands-free. Zuckerberg has described a plan where Muse works alongside a growing line of Meta AI smart glasses, which would let users summon hands-free what he calls “personal superintelligence”.
The price is personal data
Muse works best when users give the company some of their most sensitive information. That includes credit card details, purchase histories and access to email inboxes.
For Meta, that is a heavy request. The company’s reputation on privacy has been damaged since the Cambridge Analytica scandal of a decade ago, which followed the discovery that data on millions of Facebook users had been breached and used by a political consulting firm.
Recent legal news adds to the doubt. Two days after the Meta Connect keynote, on 25 September, a second New Mexico jury found that Meta lied about how Facebook used personal information. Meta says it disagrees with the verdict and will defend itself against what it calls efforts to distort its record.
Zuckerberg addressed privacy briefly in his speech. An image flashed up behind him of the Muse mascot hugging a blue padlock. “Given how personal Muse and the content on your glasses is, we designed state-of-the-art privacy and security into all these systems from the beginning,” he told the audience.
He described one protection in detail. It is a personal virtual machine, a self-contained computer system running inside Meta’s cloud, where the company says Muse users’ data will be stored. Zuckerberg promised it would keep every customer’s information secure and that soon “even Meta won’t be able to see that information”. The virtual machine is due later this year, with further privacy protections to follow.
Kate Winick, a principal analyst at Forrester who covers social media and influencers, noted that users still have to opt in to many of those protections. “I think if they thought they could get away with not doing that, they would,” she said.
Soon after the keynote began, social media users began reporting that Muse had run amok. Some claimed that the agent read emails without permission. Meta has pushed back, saying it does not believe Muse accesses emails unless the user has consented.
Brooke Istook of the Heat Initiative, a campaign group, argues that Meta’s record should limit what it is trusted with. “Consumers know that Meta has problems, and that to date we haven’t been able to trust them to make their products safe for children. So why would a consumer want to trust them with some of their most private and sensitive information?” she said.
Moorhead sees it differently. He thinks most users will accept some privacy trade-offs when they get convenience and usefulness in return. “If the consumer sees the trade-off as beneficial, then they’ll keep it going,” he said. “This is why Facebook and Instagram still have billions of users.”
Winick agrees that the product itself appeals to people. “It’s a very real time-saving benefit that a lot of people will want and will like,” she said.
Smart glasses bring their own privacy debate
Meta has put a lot behind smart glasses. Winick said the company is “making an investment to position themselves as a category leader”. She added: “However big this category turns out to be, they will own it – for now.”
The glasses divide opinion. Some people have called them “pervert glasses”, because they can be used to film people without their knowledge. Meta has taken steps to stop users from tampering with the light that shows when a photo or video is being captured. At Connect, Zuckerberg also announced new audio-only smart glasses, an apparent attempt to ease privacy concerns.
Paying for the AI push
The advertising business remains the engine behind all of it. Profits from social media advertising have paid for earlier bets, including the much-mocked Metaverse, and now fund a large expansion of AI infrastructure.
That expansion is costly. Meta has taken on $83.7bn in long-term debt, according to its most recent financial statement. At the second-quarter profit of $15.9bn, the debt equals a little over five quarters of earnings. That comparison is our own, and it does not account for Meta’s other income and costs.
Meta executives say the spending is worth it. Andrew Bosworth, the company’s chief technology officer, told the BBC that the pitch is about agents that act for the user. “It’s really about your agent, who can do work on your behalf, who is your constant ally in whatever you’re trying to accomplish in your goals in your life,” he said.
What happens next
Several events will show whether trust or revenue wins out. Sorkin’s film is in cinemas this week, and a new Los Angeles trial over alleged social media addiction begins later this month. Meta’s appeals of the New Mexico and California verdicts continue. The personal virtual machine for Muse is due before the end of the year, and users will judge whether “even Meta won’t be able to see that information” holds up in practice.
For now, the numbers favour Meta. Usage is up, revenue is up and Muse has drawn millions of users within a month. The evidence against it sits in courtrooms, in polls and in the doubts of campaigners who ask why anyone would give a company with this record their credit card and their inbox. Three measures will show which way it goes: Muse’s weekly active users, which stand above three million today; the outcome of Meta’s appeals; and the next quarterly results, which will show whether the 28% revenue growth continues while the legal bills rise. Meta has large plans. Whether it can carry them out depends on whether its users believe it.
Sources: BBC News reporting on Meta, Muse and the company’s legal cases; Reuters; Reuters/Ipsos survey; Pew Research Center; Hollywood Reporter; New York Times; Meta financial results; statements from Mark Zuckerberg and Andrew Bosworth; comments from Alison Taylor (NYU Stern), Patrick Moorhead (Moor Insights & Strategy), Kate Winick (Forrester) and Brooke Istook (Heat Initiative).
