This past week, a landmark settlement worth up to $17 billion was reached in a federal lawsuit filed against Meta, the parent company of both Facebook and Instagram. The lawsuit came in response to leaked internal research conducted by Facebook that drew enormous attention to what the company itself knew about its platform’s effect on young people, particularly teenage girls.
Meta was accused of intentionally using product features to keep young people engaged, misrepresenting the safety of its platforms, and collecting information from children under 13 without the parental consent required by the Children’s Online Privacy Protection Act (COPPA).
There are striking similarities between this case and the historic litigation filed against Big Tobacco in the 1990s. The allegations at the heart of both cases were quite similar: In both suits, plaintiffs alleged that the corporations knew something about the risks of their products that the public did not fully understand, yet continued to operate in ways that encouraged greater consumption.
Beyond the massive monetary settlements, both cases also resulted in significant changes to how the companies could market and deliver their products.
Big Tobacco companies ultimately accepted sweeping restrictions on how they could market their products, particularly to children. They agreed to stop using cartoon characters such as Joe Camel, limit billboard and outdoor advertising, end most event sponsorships, prohibit paid product placement on screen, and stop using tobacco brands on merchandise.
As part of last week’s settlement, Meta has agreed to impose stronger protections for users under 18, including daily time limits on Facebook and Instagram, overnight restrictions on access and notifications, reduced use of visible like counts and certain beauty filters, stronger age-verification measures, expanded parental controls, and the option for teens to use less personalized feeds. Meta also agreed to be subject to independent third-party monitoring of its practices to ensure it follows these new youth-safety requirements.
Interestingly, Wall Street does not appear to expect Meta to suffer the same kind of financial consequences that confronted Big Tobacco. In fact, Meta’s stock rose as much as 4% shortly after the agreement was announced and finished the day higher, suggesting that investors were relieved the company had removed the risk of a potentially much more costly verdict that could affect its long-term business model.
As the father of two minor children, I applaud many of the protections resulting from the settlement. While I personally use some of these platforms, I have long recognized the dangers that spending too much time on social media can pose not only to children, but to adults as well. With the rise of AI and increasingly sophisticated algorithms, this threat has become even more pronounced.
Companies that design products specifically to capture and hold our attention, especially the attention of children, must be held accountable for the tools they create. Hopefully, this settlement will encourage all technology companies to take that responsibility more seriously. With that said, no settlement or regulatory restriction will have much impact unless parents fulfill their responsibility to protect their children in this new digital age. Technology has gotten remarkably good at capturing our children’s attention, which is why parents can never afford to stop paying attention to how they use it.
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)