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The winners and losers of Meta’s historic $18 billion settlement

The winners and losers of Meta's historic $18 billion settlement

The winners and losers of Meta's historic $18 billion settlement

On Wednesday, Meta has reached an agreement with attorneys general in states, Washington, D.C., and U.S. territories alleging that the design of the company’s apps had harmed children. The company will pay up to $18 billion in fines and tweak its apps to potentially limit the amount of time teens spend on them each day.

The settlement is historic: It is the largest amount ever paid to states by a Big Tech company, and it could have huge implications for how other social media companies design their platforms for both children and adult users.

What we don’t know yet is whether the specific changes Meta has agreed to implement will alleviate what caused the lawsuit in the first place: the problems teens face when logging onto social media.

The company will install infinite scroll pauses, impose a two-hour daily time limit on using its apps, and silence notifications at night and during the school day. Meta has also agreed to limit the use of beauty filters and hide the counting of likes on posts by default, while strengthening age verification and parental control tools. The agreement also allows teens to choose a non-algorithmic feed, which harkens back to the early days of social media, and turn off autoplay, which means they have to tap or swipe to see specific content.

Meta lost two lawsuits this year regarding security on its platforms. Now the company has taken a more proactive stance in innovating their products, says Stavros Gadinis, a professor at the University of California, Berkeley, School of Law. “Their strategy is evolving,” he says, because they may think that by embracing these changes they will “convince consumers that their product is credible.”

The settlement addresses an issue that has raised alarm among lawmakers and parents but could miss the point. Major social media companies are blamed for the state of the modern world, but mere usage is not the cause of the problems teens face. Because social media is a highly visible target, it fuels anger. People think, “These are the bad guys, we have to go after them,” said Ari Lightman, a professor at Carnegie Mellon University’s Heinz College of Information Systems and Public Policy. “The bad guys are everywhere, unfortunately.”

Approaches that track and limit children’s time online do not address the deeper issues that draw them online and lead them to have a negative experience. These solutions could cost more than a whopping $18 billion. “We don’t really offer good programs related to digital citizenship, to cyber hygiene,” as an essential part of K-12 education, Lightman says.

Cody Venzke, senior staff attorney at the ACLU, is concerned about the practical implications of the settlement. He sees it as a way to “circumvent the First Amendment by implementing these requirements through a settlement agreement, as opposed to the legislative process.” Venzke states that an age verification mandate for certain content will result in Meta verifying the ages of all its users. These measures may affect online privacy.

The ACLU has opposed laws that could lead to age verification, arguing that blocking teens’ access to social media violates free speech protections. The settlement could see Meta block access to content for both teens and those who do not adhere to age verification on its platforms, while also collecting more data on all its users in a way that “establishes surveillance as a measure to protect children.”

Meta said in its statement today that it “wants to do this right for parents and teens, which is why we worked with the attorneys general to set a new industry standard,” and that the agreement builds “on our longstanding efforts to empower parents and support teens.” The company’s shares rose about 1% on news of the settlement.

People think, “These are the bad guys, we have to go after them. The bad guys are everywhere, unfortunately,” says Ari Lightman.

The dominant refrain in recent years has been that screens and social media have ruined childhood, addicted children and damaged their mental health. But a 2023 report from the U.S. Surgeon General’s Office noted that there are also benefits — such as helping teens find community and express their creativity — and “we don’t yet have enough evidence to determine whether social media is sufficiently safe for children and adolescents.”

More recent research has reversed the destruction of childhood stories. The University of Manchester tracked the social media and gaming habits of 25,000 children over a three-year period and found “no evidence” that more frequent social media use or gaming activities led to an increase in anxiety and depression over the coming year. Another from the University of Toronto found that LGBTQ teens can benefit from social media for emotional support, education and research. A study published last year in Scientific Reports found that people often overestimate their “addiction” to social media, which is more often a habit than comparable to an addiction to a substance like nicotine. “Continued overuse of this terminology risks stigmatizing healthy use, wasting public health resources, and contributing to moral panic around social media use,” the researchers wrote.

In its blog post announcing the settlement, Meta called on its competitors, such as YouTube and TikTok, to follow its lead: “While this is an important step, the fact is that teens can fluidly switch between dozens of apps per day. All platforms should empower parents and support teens by taking the same measures, because we know that when teens are limited in one app, they simply switch to another.” The agreement states that Meta will pay more money if TikTok and YouTube also agree to similar restrictions for teens, and will also pay $5 billion each.

Meta knows it needs eyes. Calling its competitors to also kick teens off their apps after an hour a day would level the playing field in a competitive attention economy and heighten the civil liberties concerns Venzke raised about larger swaths of the internet.

Wednesday’s settlement continues the trend this year of Meta taking some responsibility for platform design, a consequence that tech companies previously sidestepped. We have all been living in the great social media experiment for the past twenty years, where Meta has always survived and taken new forms. Now it sets the tone for the next era of experimentation.


Amanda Hoover is Business Insider’s senior technology correspondent. She writes about the biggest technology companies and trends.

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