Meta Platforms (NASDAQ:META) suffered a major legal setback this week when a New Mexico judge ordered the company to pay $25 billion in penalties over the Cambridge Analytica scandal.

The ruling followed a September jury verdict finding that Facebook misled users about their data privacy. While the headline figure drew most of the attention, a single sentence in the order added another cost: interest of 15% a year until the penalty is paid, which works out to about $3.75 billion annually.

Meta Platform’s New Mexico Bill Could Be Much Higher

In his ruling, Judge Francis J. Mathew wrote that New Mexico law will apply a statutory post-judgment interest clause to the company. This section applies when a civil judgment involves willful acts, intentional wrongdoing, or unconscionable trade practices. 

In this case, the judge ordered the company to pay 15% annual interest until it pays the cash. This means the company will now pay about $3.75 billion annually until it pays it off. 

These are huge numbers, even for a company the size of Meta Platforms. For example, Meta paid $1.36 billion in dividends in the third quarter, or about $5.4 billion annualized. In theory, the annual interest alone of roughly $3.75 billion would equal about 69% of that yearly shareholder payout.

Meta Platforms Intends to Appeal

In a statement, Meta Platforms said that it planned to appeal the ruling to the New Mexico Courts of Appeals and potentially to the U.S. Supreme Court. In most cases, such appeals take between 3 and 5 years. If it takes four years and the company loses, its post-judgment interest alone would be about $15 billion, bringing the total to $ 40 billion. 

At the same time, to pause the enforcement of the $25 billion judgment while appealing, Meta will need to post a supersedeas bond or cash collateral. In this case, the company would need to commit about $30 billion, the principal judgment plus the interest expected to accrue during the appeal.

Instead of appealing, the company may also negotiate with New Mexico and reach a settlement. Such a move would prevent another expensive legal process. 

The ruling came two months after Meta Platforms settled with 52 attorneys general to resolve litigation related to teen mental health and social media. In its earnings report, Meta took a $9.89 billion charge related to this settlement. 

Meta ended the last quarter with $11.2 billion in cash and cash equivalents and $71 billion in marketable securities. Its non-marketable equity investments rose to $32 billion.

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