Will Meta's $18 Billion Settlement Change Social Media?

The Journal.

Meta has reached an $18 billion settlement with 48 states over allegations that its platforms harm youth mental health and promote addictive

Key takeaways

• Meta's settlement marks a turning point in social media regulation, with unprecedented platform-wide changes for underage users.

Main topics

• Meta's $18 billion settlement with 48 states
• Changes to Instagram and Facebook for underage users

Notable quotes

"For meaningful progress to happen, we urge our peers to join us." – Meta in open letter calling on TikTok and YouTube.

Conclusion

While Meta's settlement represents a major step toward regulating social media for youth, it is

Transcript preview

Speaker 7 (0:05) This was supposed to be the second week of a landmark trial against the biggest social media company in the world. Speaker 3 (0:11) We have now entered week two of the high-profile federal trial against Meta. A judge and jury are being asked to decide if social media is intentionally addictive. Speaker 7 (0:22) The lawsuit, brought by a coalition of state attorneys general, alleged that Facebook and Instagram have harmed underage users. This story takes us to an Oakland, California Speaker 6 (0:32) courtroom. Testimony is underway and Meta's federal trial over claims its platforms have harmed youth mental health and also track children in violation of federal law. Speaker 8 (0:44) So I was planning for my week to look Speaker 7 (0:47) a lot Speaker 8 (0:47) different. Speaker 7 (0:49) Our colleague Megan Bobrowski had been attending the trial. Speaker 8 (0:52) I'm mapping out, Speaker 7 (0:53) like, I had driven Speaker 8 (0:54) over on Tuesday, and I was like, should I drive again? Should I take public transit? I'm trying to, you know, like, that's where my head was at. Speaker 7 (1:03) But then, yesterday morning, before Megan even left her apartment... Speaker 8 (1:07) It very quickly became, oh, I'm not going to court because Meta has settled this case. Speaker 2 (1:15) And breaking just moments ago, an update on Meta's landmark trial. States that filed the lawsuit and Meta agreeing to settle claims. Speaker 7 (1:24) The settlement includes an $18 billion payout to 48 states, as well as a slate of changes to the way that young people can use Meta's platforms. Meta did not admit to wrongdoing. Speaker 8 (1:35) It definitely is the most effort that we've seen to date to stop users from building these addictive... perhaps unhealthy habits of just constantly scrolling. Meta is a company that is always looking to grow. And so it's doing something here that is going to inhibit its growth because partially they're being forced to, right? They're sort of being a little bit backed into a corner here. It now marks a new frontier because now they're in this place where they're going to be putting restrictions on their apps that have never existed before. Speaker 7 (2:14) Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Thursday, August 27th. Coming up on the show, will Meta's multi-billion dollar settlement change social media? Speaker 6 (2:43) When the world keeps shifting, we're there to help you act with confidence. At HSBC, we bring together the people, ideas and capital that drive growth, backing your ambitions at every stage. So when you're preparing for the next generation, strengthening your portfolio or you're entering new markets, we're there, bringing 160 years of experience to help you move forward. HSBC, opening up a world of opportunity. Speaker 4 (3:17) The Speaker 5 (3:18) city moves fast, but your vibe, that's different. Sharper, smoother, more alive. Speaker 4 (3:28) The new Speaker 5 (3:33) Honda City isn't just made to drive, it's made to feel. The new Honda City, all new vibe. Speaker 7 (3:47) Megan, you were in the courtroom in the days before the settlement. How did it look like the case was going for Meta? Speaker 8 (3:54) Yeah, so multiple former Meta employees testified and the plaintiffs were citing internal documents that Meta knew that it was doing things that were harmful to its underage users. I think it was clear it was not going to be a slam dunk. win for Meta. There was some stuff that was coming out in documents that did not paint Meta in a very favorable or innocent light. Speaker 7 (4:20) It seemed like a strong case for the states. Mark Zuckerberg himself was set to testify. Adam Masseri, the head of Instagram, had already briefly taken the stand. Speaker 8 (4:31) He had a very calm demeanor. He did make some comments about, you know, sort of wishing that the company had move quicker on some safety things. And so I thought that's what we were going to be hearing more of on Wednesday when we were back in court. And, you know, Meta settled, and so there's no more court. Speaker 7 (4:53) The settlement comes in the context of thousands of lawsuits that Meta is facing over accusations that it knowingly made its platforms addictive. So Speaker 8 (5:03) why did Meta agree to settle this case? There's been a shift about what their strategy is. Earlier this year, they were taking these things all the way to the end, not settling them when some of their peers were choosing to settle them. Speaker 7 (5:18) In the spring, juries ruled against Meta in two pivotal trials, one brought by the state of New Mexico and the other in Los Angeles, brought by a person who alleged that Meta's products worsened her mental health problems. Speaker 7 (5:32) The case being argued in Oakland over the past two weeks was a federal trial brought by four state attorneys general. Speaker 8 (5:39) This was a very, very big case. This was bigger than either the L.A. or the New Mexico case. Meta at one point said if they lost, it could cost them more than a trillion dollars, which is close to their entire market cap. So I think for them, and you can see this in court documents, they... you know, felt like the stakes here were really high. And you also had Meta's CFO, Susan Lee, talking on their earnings call last month saying, you know, we're facing these legal threats that