Meta agrees to $18 billion settlement over teen social media addiction lawsuit

Meta has agreed to a significant settlement of up to $18 billion (approximately $24.82 trillion won) to resolve a large-scale lawsuit brought by U.S. state governments concerning the issue of teenage social media addiction. The agreement, reached with the attorneys general of 48 states, is expected to conclude the major trial that accused Meta of intentionally disregarding the harmful effects of its platforms, including Instagram and Facebook, on young users.

As part of the settlement, Meta will implement substantial changes to its platform policies. These include limiting daily usage for users under 18 to two hours and blocking access from midnight to 6 a.m. Notifications will also be restricted during school hours. Furthermore, teenage users will have the option to view content chronologically instead of through algorithmic feeds, a setting that parents can designate as the default. Features like 'like' counts on posts will also be hidden for young users.

A notable aspect of the agreement involves Meta's push for competitors like TikTok and YouTube to adopt similar child safety measures. Meta has stipulated that 30% of the settlement funds will be contingent on these platforms agreeing to specific terms. These include implementing daily usage limits of one hour, nighttime usage restrictions, and age verification features. Meta has urged these companies to contribute $5.3 billion (approximately $7.3 trillion won) to a "Youth Online Safety Initiative" led by the state governments.

Meta has communicated to TikTok and YouTube that "we want teenagers to benefit from new industry standards, but we cannot do it alone," emphasizing that protective measures are only effective when implemented collaboratively. The company argues that restricting usage on one platform often leads users to migrate to others. Analysts suggest that while Meta's user engagement might decrease slightly, the company would not be at a significant disadvantage if competitors implement similar changes. This could also strengthen TikTok and YouTube's defense against future legal challenges.

The remaining 70% of the settlement funds will be paid to state governments over 10 years for public health purposes, with California expected to receive the largest share. This settlement, occurring just over a week after trials began in Oakland, California, addresses allegations that Meta designed its platforms to be addictive and collected personal data from users under 13 without parental consent. While the $18 billion settlement represents a fraction of Meta's $200 billion annual revenue, it could significantly impact its advertising-based business model. However, analysts predict it may not substantially affect quarterly earnings due to the limited revenue generated from teenage users. Importantly, while state lawsuits against Meta may conclude, numerous lawsuits from individuals and school districts across the U.S. remain.

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We want teenagers to benefit from new industry standards, but we cannot do it alone. Protective measures are only effective when implemented collaboratively.