‘Just the beginning’: New Mexico AG warns AI industry after $25B Meta ruling

Por Alfred Ng — POLITICO – TOP Stories

Fresh off landing a $25 billion judgment against Meta for misleading the public about its privacy protections, New Mexico Attorney General Raúl Torrez is putting artificial intelligence and Silicon Valley on notice they could be next.

Torrez (D) took a gamble when he opted not to join a $17 billion multistate settlement with Meta in August. But that move paid off with a record-setting ruling against the company Wednesday.

The case relied on consumer protection laws to claim Meta deceived users about its privacy controls, a tactic states are already using against AI developers.

“Anyone in artificial intelligence, people who are building products that they can’t control, people who are making representations in the marketplace about what a product does or doesn’t do, or how it uses or doesn’t use specific types of consumer data, we are going to be watching, and we are prepared to do this again,” Torrez said in an interview. “The message should be received in Silicon Valley that this is not the end, it’s just the beginning.”

New Mexico’s lawsuit focused on the company’s public response to the 2018 Cambridge Analytica scandal rather than the potential data privacy violation itself.

Regulators scrutinized Meta after a whistleblower revealed Facebook collected and shared people’s information with political consulting firm Cambridge Analytica.

CJ Mahoney, Meta’s chief legal officer, told POLITICO in a statement that the verdict made it “all but impossible to do business” in New Mexico, and the company would appeal.

Regulators have increasingly used deceptive-claims lawsuits to hold tech companies accountable for online safety and artificial intelligence threats. The multistate lawsuit against Meta focused on social media platforms’ public remarks about kids’ online safety protections, and the companies’ actions that contradicted those promises.

Unlike data privacy, AI, online safety or any other tech policies, every state has its own version of consumer protection laws, and the verdict in New Mexico puts together a road map for other states to follow, experts said.

“New Mexico didn’t sue over content or speech, where tech companies have built legal shields. It sued over deception: Meta told users one thing about its privacy practices and did another, and the state had consumer protection laws to meet the moment,” Nidhi Hegde, executive director of the American Economic Liberties Project, an anti-monopoly advocacy group, said in a statement.

Torrez said more states should consider going to trial against tech companies, noting that even a loss offers benefits. He highlighted the value of bringing corporate documents to the public’s eye, which would remain confidential in a settlement.

Documents submitted at trial and reviewed by Serge Egelman, a security and privacy researcher at University of California, Berkeley, who testified as an expert witness, questioned Meta’s promise to review apps that had access to large amounts of data in response to the Cambridge Analytica concerns. Meta only conducted 14 forensic data audits despite the company’s own investigation finding thousands of instances of suspicious activity, according to court documents.

“They introduced this ‘audit report from a recognized auditor,’ and I pushed back and pointed out if you read to the bottom of the page, it explicitly says, ‘This is not an audit, no audit was ever performed,’” Egelman said.

New Mexico, Texas and Florida were the lone states that opted not to settle their claims coming out of Meta misleading its users on kids’ safety, addictive design and privacy. Torrez suggested that more states should launch independent cases against companies for deceiving consumers.

“There is a hunger in this country for people that are ready and willing to fight these corporations,” Torrez said. “Even if you lose but you’re doing the right things, you’re fighting the right fight, there’s going to be a high tolerance for that among citizens, among everyday people.”

The risks of going to trial — unpredictable juries, high costs, verdicts overturned on appeal — can often make it appealing to take a settlement and call it a win, said Kathleen McGee, a partner at Lowenstein Sandler and a former bureau chief at the New York Attorney General’s Bureau of Internet and Technology.

But the verdict in New Mexico is expected to shift how state enforcers approach tech companies, she added.

“It will encourage all states’ attorneys general to be emboldened to bring more cases against companies that they think are engaged in public harm,” McGee said.

Torrez added that he also opted against settling because he wanted to raise the costs of violating regulations for tech companies. He noted that billion- or trillion-dollar companies like Meta see settlements as a cost of doing business, and questioned their effects on accountability.

On Meta’s third-quarter earnings call Wednesday, the company did not address the verdict but noted in its filing that the multistate settlement added $10 billion to its expenses, as its quarterly revenue reached $64 billion.

“It’s important for us to change how all of these companies calculate that cost. I was willing to take the risk, but I also thought it was important for the public to have a full understanding of exactly what they’ve been doing,” he said.

Fonte: POLITICO – TOP Stories