A lawyer who previously worked on class-action litigation against major tobacco companies says Meta’s recently announced $18 billion settlement follows a familiar corporate playbook — one that ultimately allowed cigarette makers to avoid harsher penalties — and represents only a few days of the social media giant’s annual revenue.
The assessment appears in an analysis that examines the structural parallels between the Meta agreement and the 1998 Master Settlement Agreement between state attorneys general and the four largest U.S. tobacco manufacturers. That deal, valued at $206 billion over 25 years, resolved state lawsuits seeking recovery of Medicaid costs for smoking-related illnesses but did not include admissions of wrongdoing or significant changes to industry marketing practices.
According to the analysis, the Meta settlement — which resolves a long-running class action over the company’s use of facial recognition technology in violation of Illinois’ Biometric Information Privacy Act (BIPA) — similarly allows the company to settle without admitting liability and without court-ordered structural reforms to its data practices. The Illinois law, enacted in 2008, requires companies to obtain written consent before collecting biometric identifiers such as faceprints.
The lawyer cited in the piece, who participated in the tobacco litigation, argues that both settlements function as “cost of doing business” arrangements. Meta’s $18 billion payout, while historic in scale for a privacy case, amounts to roughly three to four days of the company’s 2023 revenue, which exceeded $134 billion.
What Happened
The $18 billion settlement resolves litigation alleging that Meta collected facial-recognition data from Illinois users without obtaining the written consent required under BIPA. The case is among the largest privacy-related settlements in U.S. history and the most significant test of BIPA’s enforcement provisions since the statute was enacted.
Under the agreement, which received preliminary court approval in 2024, class members would receive an estimated $200 to $400 each, depending on final claims rates and administrative costs. The settlement covers Illinois residents whose facial templates were created from Facebook photos without informed consent between approximately 2011 and 2021.
Meta has not admitted liability as part of the agreement, a structural feature that mirrors provisions in the 1998 tobacco settlement, which barred state attorneys general from bringing future recovery suits while permitting the major cigarette manufacturers to continue operating without judicial findings of wrongdoing.
Why It Matters
The comparison underscores a recurring pattern in high-stakes corporate litigation: massive settlements that set financial records but leave core business models intact. In the tobacco case, the industry secured immunity from future state lawsuits and continued marketing practices that attracted new generations of smokers. Decades later, public health researchers attribute the gradual decline in U.S. smoking rates more to excise taxes, smoking bans, and changing social norms than to the financial terms of the 1998 agreement.
For Meta, the BIPA settlement resolves a significant legal threat but does not mandate changes to how the company collects or processes biometric data at scale, nor does it establish a federal privacy standard. Critics argue that without regulatory enforcement or structural remedies, such settlements risk becoming routine line items rather than meaningful deterrents — particularly for companies whose annual cash flows can absorb multibillion-dollar penalties without affecting operations.
The analysis notes that Meta’s $18 billion payment represents approximately 3 to 4 percent of the company’s total revenue across the period covered by the litigation, a fraction that compares unfavorably to the cumulative financial impact the tobacco settlement had on its targets when measured against industry profit margins at the time.
Background and Context
The 1998 Master Settlement Agreement was negotiated by 46 state attorneys general and the four largest U.S. tobacco companies — Philip Morris, R.J. Reynolds, Brown & Williamson, and Lorillard. It was the culmination of state-level lawsuits alleging that cigarette makers had concealed the health risks of smoking and conspired to market products to minors. The settlement imposed payments on the companies in perpetuity and restricted certain advertising practices, including the use of cartoon characters in tobacco marketing.
Yet the agreement explicitly did not require the companies to admit wrongdoing, did not restrict the use of price-based promotions that attract young smokers, and did not limit the industry’s ability to develop and market new products. Internal industry documents released through subsequent litigation showed that companies had studied the settlement’s structure and modeled the payments as a manageable cost of continued operations.
Meta’s BIPA litigation followed a similar trajectory. The Illinois Supreme Court’s 2019 ruling in Rosenbach v. Six Flags established that plaintiffs need not prove actual injury to sue under BIPA, opening the door to massive statutory damages — up to $1,000 per negligent violation and $5,000 per intentional violation. That standard transformed BIPA from a relatively obscure state statute into one of the most consequential privacy laws in the United States, with potential damages reaching billions of dollars even for technical violations.
Meta disabled its facial recognition system in 2021 and deleted the faceprint data it had gathered, but the litigation continued. The settlement represents the resolution of cases that had been consolidated and pursued for years in federal and state courts.
Analysis: The lawyer’s comparison highlights a structural critique of corporate settlements: that financial penalties, even historically large ones, may not alter corporate behavior when they fall below a threshold that meaningfully affects profitability. In the tobacco case, the 1998 agreement did not reduce cigarette consumption directly; subsequent regulatory and cultural shifts did. For Meta, the settlement removes a legal liability but does not establish precedent that would constrain the company’s broader data practices, including those outside Illinois. The analysis suggests that meaningful deterrence may require either legislative action creating a federal biometric privacy floor or regulatory enforcement with the authority to mandate structural changes to business models — outcomes that private litigation alone cannot reliably produce.
What to Watch Next
Several developments will determine whether the Meta settlement becomes a model for future privacy litigation or a cautionary tale about the limits of class-action enforcement:
– Final court approval of the settlement and the actual per-claimant recovery after costs, which will test whether class members view the result as adequate compensation.
– Whether Meta faces additional BIPA suits from non-class plaintiffs or from other states considering legislation modeled on the Illinois statute.
– Congressional action on federal privacy legislation, which the settlement neither advances nor forecloses. Advocates have argued that BIPA’s enforcement model should be nationalized; industry groups have opposed a federal standard on different grounds.
– Continued litigation against other technology firms using biometric data, including facial recognition vendors and employers using fingerprint or iris scanning systems.
– The financial impact of the settlement on Meta’s quarterly results, and whether the company adjusts its data-collection practices in response to investor or regulatory scrutiny.
Conclusion
The comparison between Meta’s settlement and the 1998 tobacco agreement raises a foundational question about the purpose of corporate litigation: whether the objective is compensation for harm, punishment for wrongdoing, or structural reform of industry practices. The tobacco settlement delivered financial recovery to states but left marketing practices largely unchanged, a result that public health advocates have described as incomplete. Meta’s settlement delivers financial recovery to a class of Illinois users but leaves biometric data practices outside judicial oversight. Whether the Meta agreement will be remembered as a turning point in privacy enforcement or as another iteration of the cost-of-doing-business model will depend on actions taken outside the courtroom — in legislatures, regulatory agencies, and the courts that interpret future privacy claims.
Sources: https://theconversation.com/metas-18b-settlement-echoes-past-tobacco-lawsuits-and-how-they-avoided-harsh-penalties-290819
Source: The Conversation – Global
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Story synopsis gathered from: The Conversation – Global — source
