How Will Meta’s Landmark Settlement Change Social Media?

Meta will pay up to $17 billion to settle a lawsuit alleging Facebook and Instagram violated child privacy and consumer protection laws. The case, brought by 47 states and the District of Columbia, could mark a turning point for social media in the United States. “Meta has agreed to make massive transformations that will reduce the risk of harm from its platforms — and will do it within months,” said Attorney General Rob Bonta when announcing the deal, which includes a $2.2 billion payout to California. “We are talking about time limits, stopping notifications during school, a block on the app during critical overnight hours, bans on plastic surgery filters, and so much more.” 

Guests:

• Racheal Myrow, reporter and senior editor, KQED
• Dr. Jason Nagata, adolescent medicine specialist, UCSF Benioff Children’s Hospitals
• Peter Ormerod, associate professor of law, Villanova Law School

This is a computer-generated transcript. While our team has reviewed it, there may be errors.

Mina Kim: Welcome to Forum. I’m Mina Kim. In a landmark settlement, Meta will pay up to $17 billion and make changes to its products in a case brought by 47 states, D.C. and U.S. territories, claiming Meta’s addictive social media platforms harmed children. In announcing the deal, State Attorney General Rob Bonta said it includes more than a $2 billion payout to California.

Rob Bonta: This is a major breakthrough, a milestone moment, a watershed moment, because when it comes to protecting our children’s mental health, there is no time to lose. Instead of getting tied up in years of trials and appeals, we have secured the changes we were after.

Mina Kim: For more on the impact the settlement could have on social media companies and on the way kids use Facebook, Instagram and potentially other major platforms, we begin with KQED’s senior editor of our Silicon Valley news desk, Racheal Myrow. Hi, Racheal.

Racheal Myrow: Hi, Mina.

Mina Kim: So glad to have you on with us. Explain to me why $17.1 billion. What is that for? And what are the major changes that Meta has agreed to make?

Racheal Myrow: Well, so it’s going to be a little unclear how the money gets spent, and there are contingencies we’re going to talk about this hour. Part of it, California shares more than a billion dollars — between $1.5 and $2.2 billion. The range depends on whether Meta’s rivals sign on — TikTok, YouTube — because part of the money, $5 billion, that’s roughly a third of that $17 billion figure, is contingent on those rivals signing on. It’s a very curious settlement agreement for that reason.

But the money for California is earmarked for youth mental health. And, of course, the legislature and the governor get to decide the specifics. So that fight moves to Sacramento this fall.

Now, onto some of the specifics, the things that a family with children is going to see as a result of this settlement: Teenagers get a two-hour daily cap across Facebook and Instagram combined. That’s cumulative. So, right, a second Instagram account doesn’t buy more time for the kid who’s, quote-unquote, addicted.

The apps go dark midnight to 6 a.m., notifications muted during the school day, like counts hidden. Only a parent can lift any of that.

But I’ll tell you, Mina, a few of the things I caught only after a good night’s sleep: Direct messages are exempt. So think of all the teens we hear about who are hit up with dubious drug offers or attempts to groom them for sex trafficking.

And again, going back to that idea of the contingency built into this agreement, the two-hour limit is a five-year commitment, not 10. It only extends to 10 if competitors sign off.

Mina Kim: Hmm. It’s such an interesting deal. So when you say they’re exempt, you mean they continue to receive direct messages even during these sort of block times when notifications are blocked?

Racheal Myrow: Yeah, I mean, then presumably they can see the drug offer after school’s out, you know what I mean? So, talk about —

Mina Kim: You know, these changes are being touted as significant. Why did Meta make — what was Meta being accused of by the —

Racheal Myrow: So Meta was accused of knowing that it had millions — and I mean millions — of children under the age of 13 on its platforms, which is a violation of federal law.

Meta would say, and did say in court during the one week of trial that we got, “Hey, we’re cutting them off.” But internal research and documents also showed that they were enthusiastic about the interest from underage users because those people, long term, could be another set of eyeballs to sell to advertisers.

And so the states were basically arguing that, but also violation of state consumer protection laws, you know, designed — basically arguing not that, you know, this is not a free speech case, right? This is not bad people posting bad things on social media platforms and then holding the platforms accountable for that. They’re arguing, no, this is a consumer product liability, personal injury liability situation where you’ve got a faulty design leading to damaging products, and then you’re lying to the American public about that, and also what you’re —

Mina Kim: Doing about it. Hmm. And so that’s why the states were alleging violations of consumer protection laws.

You’ve been talking about, you know, the contingencies with this, right? Initially, Meta will pay out $12 billion, but the additional five will depend on if Snap, TikTok and YouTube settle with the states as well and agree to similar changes. Did you reach out to these companies to see what they’re thinking?

Racheal Myrow: KQED has, and heard nothing back, and you can understand it, right? I’m sure they’ve got the turkey sandwiches out in some kind of a meeting room trying to figure out how they want to respond.

And it’s worth saying that all of these companies are facing major lawsuits from state attorneys general, from individuals, from school districts that have finally had it. Finally had it.

Mina Kim: I want to bring Peter Ormerod into the conversation now, associate professor of law at Villanova Law School. Peter, thanks so much for being with us.

Peter Ormerod: Thanks for having me.

Mina Kim: I’d love to get your assessment of this settlement and why you think Meta agreed to settle, what incentives they had.

Peter Ormerod: Sure. I think that this is a momentous waypoint in changing the way that young people, youths and teens use social media, the extent to which they do use social media. I don’t think anyone should expect that this is going to be the end of the matter or that this is going to be a cure-all. But it certainly is, I think, an indication of the current trajectory that cases like this — and there are many other cases like this — are currently taking.

And so, you know, the conclusion to the story hasn’t been written yet. But certainly, this is a very important chapter in that story, and I think it’s, you know, certainly emboldening for a lot of plaintiffs, for a lot of advocacy groups that want to change the way that the platforms work and the effects that they have on children.

In terms of why — why do we think Meta settled? My sense about this, and, you know, is just from following the trial, is that it was not going particularly well for them. And I think — I mean, the settlement agreement itself is 130 pages. It clearly was not something that was, you know, put together pretty quickly. So I think it’s fair to speculate that the parties have been negotiating for some time.

But my sense is, from especially the testimony on Tuesday featuring Instagram CEO Adam Mosseri, my sense of it is that that examination was going quite poorly for the company. Mosseri was expected to come back on Wednesday morning. Zuckerberg was expected to testify later. And so I think just the direction that things were going really sort of, you know, it would not surprise me if the calculus of their trial lawyers was, you know, taking a deal now is probably the best thing that can happen just because it was not going well.

Mina Kim: I’m sorry, the head of Instagram and obviously Zuckerberg of Meta, and they had lost some cases recently, right?

Peter Ormerod: Yes, they have. I mean, the other sort of most important — there was a verdict in California state court in Southern California in March. That’s the KGM case, advancing a very similar theory, but that was a sort of an individual private plaintiff.

And then there’s an ongoing proceeding in New Mexico that is brought by the New Mexico attorney general. That is not covered by this settlement. That is a completely separate and parallel proceeding.

And in both cases, the company had lost and was facing both significant civil liability in addition to mandated changes to the platform.

Mina Kim: Do you think the company was also feeling very sensitive about its reputation? Has this narrative started taking hold that they treat young users badly?

Peter Ormerod: You know, I think I am reluctant to say that I think that this is going to be the beginning of a large change from the company. Meta has a reputation as being a particularly sort of vexatious litigator. They often press very aggressive legal theories in forums in which they are not likely to succeed.

And so the fact that they settled this is quite — quite significant. If anything, it just signals that this case they did not see going their way.

But I don’t expect their legal strategy on the whole to change. I’m happy to talk a little bit more about the legal arguments that they have available, including the First Amendment, Section 230, which provides them with immunity under federal law. I expect that they are going to continue pressing those legal theories in other cases and in places where, including the KGM litigation, possibly also the New Mexico litigation.

And I don’t really see them stopping that until they get a definitive signal from the United States Supreme Court that those theories are not going to be successful.

Now, if they were to ultimately prevail on those theories, that would not have an effect on this settlement because they are voluntarily agreeing to make these changes and make this payment.

But I — I don’t personally, just given having followed the company in its litigation strategy for many years, I don’t personally see that this is going to be some kind of watershed moment in which they change their business and their strategy more generally.

Mina Kim: Yeah, and of course, Section 230, as we know, shields companies from liability for what users post. And that has been one of the ways that they have argued in the past why they should not be held responsible for the effect of their platforms.

And so given that, Peter, do you think the other companies will sign on to the settlement the way that Racheal has been describing that it’s been written, right, with these contingencies, that it’ll go up to $17 billion if these other companies sign on and various other product changes will be made?

Peter Ormerod: Yeah, and the contingencies are a really interesting wrinkle here. It is quite unusual. It’s not something that I can remember encountering in other contexts.

Do I think the other companies will sign on? I think they’re under an enormous amount of pressure to do so. These same parties, the same companies, were parties to the KGM litigation, and both Snap and TikTok settled that before the trial started.

So I think you already see, to some extent, that maybe they have less appetite for litigation, and so they might be more likely to settle in this circumstance.

YouTube’s attitude is very different, as YouTube maintains that they’re not a social media network at all and that they really don’t belong in these cases. Now, I’m, you know, I think there’s lots of reasons to disagree with that — the sort of short-form video, algorithmically recommended, things of that nature. What the attorneys general argue is sort of the most addictive of the features are shared by YouTube, so you can see why they’re in the case.

But Google’s calculus, I think, is probably a little different from the likes of TikTok and Snap. And so, to me, the thing that I’ll be watching is if there is a holdout, that’s who I would back.

Mina Kim: Listeners, what are your reactions to this settlement between Meta and the states? What questions do you have about how the settlement will work? More after the break. I’m Mina Kim.