Meta Platforms (META) has agreed to pay the state of Texas a record-breaking $1.4 billion to settle a lawsuit. The company has been accused of violating state privacy laws by using facial recognition technology without the consent of millions of Texans. It should be noted that the news of the settlement came ahead of META’s Q2 results, scheduled for release today.
META is expected to post revenue of $38.26 billion in Q2, up 19.6% from the prior-year quarter. Also, analysts expect earnings of $4.72 per share, up from $2.98 in the year-ago quarter.
Brief History
The lawsuit relates to Meta’s “Tag Suggestions” feature, which was introduced in 2011. The feature used facial recognition to automatically suggest tags for photos. Later, in 2022, Texas Attorney General Ken Paxton accused Meta of collecting biometric data from millions of Texans through its tag suggestion feature, without proper authorization.
Meta, which discontinued its facial recognition system in 2021, denied any wrongdoing. Nevertheless, the company has agreed to pay the settlement over five years to avoid further legal battles.
Legal Troubles
This settlement follows a similar $650 million payout by Meta in 2021 to resolve a class action lawsuit related to biometric privacy violations in Illinois.
These lawsuits reflect the increasing scrutiny faced by tech giants over their handling of user data and privacy. It should be mentioned that Paxton filed a lawsuit against Alphabet’s (GOOGL) Google in 2022 for violating the same biometric privacy law.
Is Meta a Good Stock to Buy?
Wall Street analysts are bullish about Meta stock despite rising legal and regulatory risks. Meta has a Strong Buy consensus rating based on 24 Buy, two Hold, and two Sell recommendations. Further, the analysts’ average price target on Meta Platforms stock of $549.35 implies 18.6% upside potential from current levels.
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