Meta is facing one of the biggest challenges yet to its social media business after agreeing to pay up to US$18 billion (A$25 billion) over the next decade as part of settlements with US states over allegations that Facebook and Instagram harmed children.

The agreement could significantly change how teenagers use the platforms, with Meta committing to stronger restrictions designed to reduce excessive engagement.

Under the settlement, teenagers would generally be limited to two hours of Facebook and Instagram use each day, while access between midnight and 6am would be blocked unless parents provide consent. Push notifications would also be largely disabled during school hours, between 8am and 3pm.

The deal involves 47 US states and several territories, with Meta agreeing to guaranteed payments of about US$12.7 billion, while another US$5 billion could depend on whether other major platforms introduce comparable child-safety measures.

California is expected to receive about US$2.2 billion, while New York could receive approximately US$1.1 billion. Texas has separately reached a settlement worth more than US$1 billion.

The settlement comes as governments worldwide increase pressure on technology companies over children’s online safety. Australia has already introduced restrictions targeting social media access for children under 16.

Meta has denied wrongdoing but says improving the online experience for teenagers is a priority.

However, the agreement does not eliminate personalised recommendations or targeted advertising, meaning the core business model remains largely intact.

The settlement could nevertheless set a precedent for thousands of other lawsuits accusing social media companies of contributing to problems affecting young people’s wellbeing.

With governments increasingly challenging how platforms are designed to capture users’ attention, the battle over who controls children’s digital lives, parents, governments or technology companies, is far from over.