Catenaa, Thursday, March 26, 2026- Meta shares fell over 7% to a 10-month low on Thursday after a ruling found the Facebook parent failed to adequately warn or protect young users, and as it laid off 700 employees due to AI spending.
Jurors in the first two US trials from a wave of lawsuits accusing social media companies of harming children have found Meta liable, a development that could set up an appeals fight challenging long-standing legal protections for tech firms.
A Los Angeles jury found Meta and Google liable on Wednesday for a young woman’s depression linked to alleged addiction to Instagram and YouTube, awarding $6 million in damages.
In a separate New Mexico case, jurors ordered Meta to pay $375 million for misleading users about the safety of its platforms for children and enabling their exploitation.
Snap and TikTok were also defendants in the trial in California. Both settled with the plaintiff before it began.
Meta, Google, Snap and TikTok-parent ByteDance are facing thousands of lawsuits alleging their social media platforms have harmed the mental health of teens and young users.
More than 2,400 such cases have been centralized before a single judge in the California federal court, while thousands of cases are consolidated in the California state court.
“For Snap, which is a much smaller company, I think this just increases the stakes for them if they have many more cases to come,” said Glenn Cohen, a professor at Harvard Law School.
Snap shares dropped about 6%, while Google-parent Alphabet was down 2.2%.
Moreover, Meta said that it is laying off 700 employees across company divisions while introducing a stock compensation program for six executives.
The affected divisions include Reality Labs, social media, sales, and talent acquisition. These reductions account for a small percentage of Meta’s nearly 79,000-person headcount recorded at the close of 2025.
The job reductions align with a shift from metaverse development to artificial intelligence infrastructure.
Meta plans to direct $115 billion to $135 billion toward artificial intelligence initiatives this year, primarily funding equipment and data center builds. The infrastructure buildout includes an agreement to use ARM central processing units in the data centers.
Chief Executive Mark Zuckerberg aims to build advanced artificial intelligence designed to serve as a personal digital associate. During an investor presentation, he noted that generative technology will transform labor dynamics, enabling solo workers to execute tasks that previously demanded large groups.
The company’s Reality Labs division has reported $76.9 billion in losses since 2021.
Meta reduced its Reality Labs workforce by 10 percent in January and closed three virtual reality studios. The January cuts resulted in 331 job losses in the Puget Sound area.
Meta also stopped producing updates for its VR workout software and abandoned several real estate leases in the Pacific Northwest. Apple leased the vacated office space.
