Meta settlement gives social media its Big Tobacco moment
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Meta agreed to settle with U.S. states for up to $16.7 billion in a landmark deal over allegations Facebook and Instagram were designed in ways that harm children.
- The company is calling on its peers to sign on to the pact as well, saying it won't work unless they jointly line up behind broad reform.
Why it matters: This is social media's version of the landmark 1990s tobacco settlement, a settlement that effectively reshapes the industry and the way young Americans experience some of their favorite platforms.
Driving the news: North Carolina Attorney General Jeff Jackson said settling the case ensures a large payout without losing crucial time.
- "Litigation would mean that we were still many years away from bringing any of these child safety upgrades to these platforms. It would risk losing another generation, and that's a risk we cannot take," Jackson said at a Wednesday morning press conference.
- "This is the most accountability that social media has ever faced," he added.
Zoom in: Meta agreed to limit users under 18 to 2 hours per day on Facebook and Instagram, block them from accessing the platforms from midnight to 6am, and limit notifications to them during school hours.
- Kids also won't be able to see likes and other reactions on posts, and beauty filters will be disabled.
- Parents can make a chronological feed the default instead of an algorithmic one.
- An independent auditor will have internal access at Meta to ensure compliance.
By the numbers: North Carolina gets at least $451 million, and potentially up to $645 million.
- "That's going to be used to support youth mental health," Gov. Josh Stein said.
The intrigue: Alongside the settlement, Meta issued an open letter to TikTok and YouTube, calling on them to join the deal.
- "We want to ensure teens benefit from this new industry standard, but we cannot do it alone," the letter says, per a source to Axios. "When teens are restricted on one app, they simply move to another. For meaningful progress to happen, we urge our peers to join us."
- Jackson said if other social media platforms don't agree to enact similar protections, the state would be "happy to take them to court."
About $5 billion of the Meta settlement (and $194 million for North Carolina) is only unlocked if YouTube and TikTok also settle with states on two conditions:
- Imposing a one-hour daily usage limit, night restrictions and age-assurance features;
- Paying about $5 billion each.
Follow the money: At roughly $17 billion, the Meta settlement is on par with historic federal civil settlements like the Volkswagen "Dieselgate" scandal and the BP Deepwater Horizon deal.
- But it's a small fraction of the 1998 tobacco deal, under which states collected more than $200 billion.
- Meta shares edged up after the deal. Investors had been bracing for the possibility of a much larger payout if the ongoing trial went to a jury verdict, with penalties ranging up to $1.4 trillion.
What's next: The deal is expected to end the trial with a judge's approval.