Meta Faces $25 Billion Penalty as Ad Revenue Grows 26%
Key Facts
A New Mexico court ordered Meta to pay $25 billion in civil penalties in October 2026 for violating the state's Unfair Practices Act, according to a statement from the state Department of Justice. The penalty order followed a jury's finding that Facebook committed 43,899,725 violations of state law in a case concerning the platform's statements to consumers about the use of their data. The judgment carries annual interest of 15% accruing until payment, according to The Record, adding a financial obligation to the principal penalty. The state had asked the court on October 1 to impose penalties ranging from $35 billion to $40 billion, according to Reuters. The penalty awarded was therefore below the range New Mexico sought before the ruling. The state attorney general said the law directs all penalty proceeds to New Mexico's school system.
On the business front, Meta's third-quarter 2026 results showed advertising revenue rose 26% year on year to $63.06 billion, according to Investing's coverage of the results. Total company revenue rose at the same annual rate to $64.60 billion, from $51.24 billion in the third quarter of 2025, according to the Associated Press. Advertising continued to account for most of the company's quarterly revenue, with its contribution approaching total revenue for the period. The improvement in advertising included a 14% increase in the worldwide average price per ad from the same period a year earlier, according to Investing's coverage of the company's results. In the market, the website reported that Meta shares rose 4% following the earnings announcement on October 21, 2026.
The results follow a second quarter in which Meta reported revenue of $60.80 billion, according to the company's filing with the U.S. Securities and Exchange Commission. Annual revenue growth in that quarter was 28%, compared with third-quarter growth of 26%. Revenue therefore rose in absolute terms from the preceding quarter, while its pace of growth slowed year on year. The third-quarter results also included a legal expense of $9.89 billion related to the settlement of lawsuits over teenagers' mental health, according to Investing. That expense relates to the settlement of those lawsuits, while the New Mexico penalty arose from the case concerning Facebook's statements to consumers about their data.
The privacy case has its roots in the Cambridge Analytica scandal, with the New Mexico Department of Justice addressing Facebook's conduct surrounding it in its statement on the judgment. Cambridge Analytica was a British political consultancy, according to Reuters. It was revealed to have collected personal data from as many as 87 million Facebook users in the incident that preceded the lawsuit. The data was collected through a third-party app, according to the agency's account of the case. New Mexico filed its lawsuit in 2021 following those revelations, with the dispute centering on what Facebook told consumers about the use of their data.
Responding to the judgment, the company's legal chief, C.J. Mahoney, said Meta was "confident of winning on appeal," according to Reuters. Mahoney's position places a challenge to the ruling on the company's forthcoming legal path in the New Mexico case. On the business front, Meta expects revenue of between $73 billion and $76 billion in the fourth quarter of 2026, according to the Associated Press. Its forecast range for the coming period is above the revenue recorded in the third quarter, with advertising continuing to account for most of its business. For 2026, the company's capital expenditure forecast ranged from $135 billion to $145 billion, according to Investing.