Meta might be on the hook for $1.4 trillion if it loses a landmark lawsuit and that would truly mark the end of social media as we know it | Tech Radar
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Meta might be on the hook for $1.4 trillion if it loses a landmark lawsuit and that would truly mark the end of social media as we know it
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One trillion dollar bills could wrap around the Earth almost three times, which means the $1.4T in fines Meta could face if it loses the huge, multi-state lawsuit arguing that the company's social media and the technology behind it encouraged addictive use in teens is more than enough financial rope to potentially squeeze it into submission or worse.
Opening arguments in the case kick off tomorrow (August 18), with Meta founder and CEO Mark Zuckerberg and Instagram CEO Adam Mosseri expected to testify.
The suit[PDF], which is in some ways the culmination of numerous cases against Meta and its alleged practices, comes on the heels of multiple legal setbacks for Meta. In March, Meta lost a case in LA Superior Court and was, along with You Tube, found negligent in causing a 20-year-old's mental health issues. That ruling came a day after Meta lost a similar case in New Mexico. Just a few weeks ago, the company was ordered to pay almost half a billion dollars after Meta's platforms were found to be, at least according to New Mexico law, a public nuisance.
This latest case, though, might not only change the face of social media but also seriously hamper Meta's ability to function.
As in other cases, AGs across 32 US states argue that Meta has used its technology to hook teens (and younger), lock them into using the platforms, and then, it argues, ignored the potential harms.
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"Meta has harnessed powerful and unprecedented technologies to entice, engage, and ultimately ensnare youth and teens. Its motive is profit, and in seeking to maximize its financial gains," and "it has ignored the sweeping damage these Platforms have caused to the mental and physical health of our nation’s youth. In doing so, Meta engaged in, and continues to engage in, deceptive and unlawful conduct in violation of state and federal law."
Meta, which has spent the last few years updating its parental controls across all its platforms and marketing those changes to the public, calls the AGs' claims "unsubstantiated" and the potential penalties "vastly disproportionate."
"The AGs offer no proof anyone in their states was misled, claim benign features like having an additional Instagram account somehow harmed their residents, and attempt to penalize Meta for industry-wide challenges like age verification. Rather than sticking to the facts or the law, the states have instead decided to chase an outlandish payout. We stand by our record of creating strong protections for teens, and look forward to making our case in court."
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So there you have, in a nutshell, the two sides, but while Meta is putting on a strong front, I don't imagine Zuckerberg and Mosseri will enter the courtroom feeling particularly confident about their chances.
Ever since prosecutors shifted their efforts from trying to prove that Meta and other social media companies were responsible for the online content that appears on their platforms to how each company built these systems and all the ways they engineered them to keep us swiping and engaged, they've been on a winning streak.
During the golden age of social media, when it was Facebook versus You Tube, versus Twitter, versus Snap, there was no more important metric than monthly active users. Meta (formerly just called Facebook) often touted user numbers and how growth was spreading around the globe. When Facebook surpassed 1 billion global users, Zuckerberg said the milestone was "amazing, humbling and by far the thing I am most proud of in my life.”
That scale also built Meta's value, since it could monetize those eyeballs through ads. It's no secret that, no matter your age, the more time you spend on the platform, the more ads you see and the more money Meta makes.
Even though Facebook's early format was more or less a meritocracy of content, it shifted in 2007 with visual updates organized by Edgerank, a basic algorithm that ranked content based on interactions, what you were likely to look at, and ongoing popularity.
More sophisticated algorithms followed, essentially feeding you more and more of what you'd most likely want to see or would like (to the exclusion of other content), helping further extend time on Facebook and Instagram. It's only in recent years that Meta has given users control of some of those algorithms so they could tailor the content of their feeds.
Of course, that's the current environment, and while these lawsuits want to force more changes, like the end of endless scrolls, their main contention is that Meta built its platforms to addict users and then, they claim, ignored warning signs (even within the company) that Instagram and Facebook might be harming youth and teens.
I've never believed Meta intended to harm anyone, but I am convinced its top priority was growing the platform, and it used every tool at its disposal to do it.
It's also incontrovertible that some children and teens have been harmed by social media (Meta is not alone in this). Even Zuckerberg appears to agree with this in some form.
During a 2024 congressional hearing over social media's alleged harms, Zuckerberg (and other social media CEOs) stood up, turned to face parents in the gallery, and offered this apology:
"I’m sorry for everything you have all been through. No one should go through the things that your families have suffered, and this is why we invest so much, and we are going to continue doing industry-wide efforts to make sure no one has to go through the things your families have had to suffer.”
It appeared to be an admission, if not of wrongdoing, that perhaps Meta and other social media companies had not done enough to protect young people on their platforms.
I don't expect an apology this time. Instead, Zuckerberg and Mosseri will offer a full-throated defense and, as noted, bring up all the ways these platforms have adjusted to give parents and teens more control.
Even so, Meta could lose, and if so, the AGs will see that $1.4T penalty, which, unsurprisingly, more or less matches the company's current market capitalization.
A loss could push Meta into a difficult financial situation that might result, if not in closure or bankruptcy, at least in a fundamental change in how it operates online. Imagine, for instance, having to pay a monthly subscription fee to use Instagram, Facebook, and Whats App, or, at the least, Meta introducing an ad-free subscription tier. Prices of the VR hardware could go up.
Finally, Meta might abandon children and teens as a potential market and shift its marketing efforts to adults only.
That seems unlikely, but I promise you a loss will trigger some kind of change.
Meta will ultimately sense if and when the case is slipping away from it and get to work on an out-of-court settlement. It'll still pay, but instead of over a trillion dollars, it'll be, say, $2 billion or so, devoted to supporting mental health services for teens, and some money parceled out to Meta's billions of US-based users.
That should mark the end of this chapter...until the next lawsuit.
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A 38-year industry veteran and award-winning journalist, Lance has covered technology since PCs were the size of suitcases and “on line” meant “waiting.” He’s a former Lifewire Editor-in-Chief, Mashable Editor-in-Chief, and, before that, Editor in Chief of PCMag.com and Senior Vice President of Content for Ziff Davis, Inc. He also wrote a popular, weekly tech column for Medium called The Upgrade.
Lance Ulanoff makes frequent appearances on national, international, and local news programs including Live with Kelly and Mark, the Today Show, Good Morning America, CNBC, CNN, and the BBC.
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