Meta Faces Setback As Supreme Court Rejects Challenge In Vermont Instagram Lawsuit

• The Court has allowed Vermont’s lawsuit against Meta to proceed, rejecting Meta’s jurisdiction challenge.
• Vermont alleges Instagram was designed to be addictive for teens and increase ad revenue through targeted advertising.
• The case is part of a wider wave of US lawsuits over social media’s impact on young users.

Shares of Meta Platforms Inc (META) fell on Tuesday after the US Supreme Court declined to hear the company’s bid to avoid a lawsuit filed by Vermont’s attorney general. The case accuses Meta of designing its Instagram social media app to be addictive for young users.

At the time of writing, the META stock was down 0.15%. 

Court Allows Vermont Lawsuit Against Meta To Proceed

The case is part of a broader wave of lawsuits across the US involving individuals, states, municipalities and school districts over the impact of social media on young users.

Courts have allowed the Vermont lawsuit to move forward after rejecting Meta’s argument that local courts do not have jurisdiction, reported Reuters. Vermont alleges that Instagram was designed to “exploit teenagers’ developing brains” to drive addiction and increase ad revenue, including targeted ads for teens.

The state also claims Meta misled users about the safety of its platform.

Meta said Vermont did not allege that Instagram or its features were designed in the state, or that any of the alleged misrepresentations were made there. Separately, CEO Mark Zuckerberg testified in a California trial in February that Instagram does not target children.

Part Of Wider State Crackdown

Vermont Attorney General Charity Clark filed the lawsuit in 2023, alleging Instagram was designed to exploit teens’ psychological vulnerabilities and encourage compulsive use. The case is part of a broader coordinated effort by 42 state attorneys general targeting major social media companies over youth safety concerns. Meta tried to dismiss the case, arguing it would face unfair legal exposure across all 50 states, but the Vermont Supreme Court rejected that claim in 2025. 

Meta’s Multiple Setbacks

Meta’s Supreme Court appeal comes after a series of recent unfavorable rulings in state-level cases. The company has faced mounting legal pressure over youth safety and platform design.

In April, Massachusetts’ top court ruled that Meta must face a lawsuit alleging Instagram is addictive for young users. In March, a New Mexico jury ordered Meta to pay $375 million over claims it misled users about safety and failed to prevent child exploitation on its platforms. Also in March, a Los Angeles jury found Meta and Alphabet (GOOG) negligent in designing harmful social media platforms for young users. 

META Stock: Stocktwits Retail Sentiment Is Bearish

On Stocktwits, retail sentiment remained “bearish.” It has been unchanged over the past 24 hours. Message volumes were “low.”

The META stock is down 7.39% year-to-date and 4.05% in the past 12 months.

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