Addictive software litigation: Early signals for casualty risk
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Insurance<br>Addictive software litigation: Early signals for casualty risk
March 26, 2026
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Authors: Adam Grossman, Director - Product Management, Moody's; Taro Ramberg, Director - Marketing, Moody's
Two jury verdicts against Meta and Google mark an important development in the evolution of liability risk. In these separate cases, juries found liability on theories alleging that certain harms were associated with software platforms designed to drive prolonged engagement.
The verdicts themselves are only an early data point. The broader significance for insurers is what these outcomes suggest about where design-centered liability theories may go next, especially when AI-related technology is at their core, and how to manage emerging risk as technology and legal arguments both evolve.
1. State of New Mexico v. Meta Platforms, Inc
On March 24, 2026, in the case State of New Mexico v. Meta Platforms, Inc, a jury found Meta liable for violations of the state’s Unfair Practices Act, which had been updated in 2025, based on allegations that Meta had engaged in ‘willful deception’ and ‘unconscionable business practices.’
New Mexico’s Attorney General Raúl Torrez alleged that Meta, the owner of social media platforms Facebook and Instagram, made false or misleading statements about safety for adult and child users. At the same time, it was further alleged that internal decisions to maximize engagement contributed to a range of harms, including increased exposure to harmful interactions involving minors.
After a six-week trial, the jury returned a verdict for the state, finding Meta liable on the state’s consumer protection claims. The statutory maximum penalty of $5,000 for each count was applied to 37,500 violations, resulting in a total of $375 million in civil penalties.
In a statement, AG Torrez remarked, “The substantial damages the jury ordered Meta to pay should send a clear message to big tech executives that no company is beyond the reach of the law. Policymakers and law enforcement officials across the country can help make this verdict a turning point in the fight for children’s safety. This is a watershed moment for every parent concerned about what could happen to their kids when they go online – and this victory belongs to them.”
In response, Meta has officially stated that they “respectfully disagree” with the decision and have indicated an intent to appeal.
2. K.G.M. (Kaley) v. Meta, Google, et al.
A day later, on March 25, 2026, a jury at the Los Angeles Superior Court (the California Superior Court with jurisdiction over Los Angeles County), in the case of K.G.M. (Kaley) v. Meta, Google, et al., found both Meta and Google (via its YouTube subsidiary) liable on negligence-based theories a now 20-year-old plaintiff alleged were attributable to the use of their platforms.
The plaintiff described using YouTube since the age of 6 and Instagram from 9 years old and argued that specific design features, including infinite scrolling and AI-based, engagement-driven content delivery, were associated with compulsive use and related mental-health injuries, including eating disorders, depression, and suicidal ideation.
The jury also heard the plaintiff’s expert testimony citing scientific literature suggesting that certain engagement-driven design features can be associated with compulsive use and downstream harm. The jury reached a 10-2 decision, awarding the plaintiff $3 million in compensatory damages and an additional $3 million in punitive damages, allocating 70 percent of responsibility to Meta, 30 percent to Google. TikTok and Snap were defendants earlier in the case but settled before trial for undisclosed amounts.
Implications for (re)insurers
What is critical for (re)insurers to understand is not the size of these verdicts, but the underlying theory of harm, which in these cases involved claims tied to allegedly engagement-driven software design.
Core allegations in these matters, and in the more than 4,000 similar current cases, generally do not center on ‘social media’ as a category; instead, plaintiffs generally allege that certain design features were selected to increase engagement and may draw on behavioral mechanisms discussed in the scientific and policy literature.
In many of these cases, plaintiffs argue that algorithmic optimization plays a central role in how engagement is created and sustained, which is why the potential relevance extends beyond any single platform. Analogous engagement-driven design practices appear in various forms across a wide range of industries outside social media, including video games, sports betting, chatbots, online retail, streaming services, and other consumer-facing digital products.
That industrial diversity is already visible in the...