This year, social media giant Meta is constantly in court. Meta has been defending against claims that its products — Instagram and Facebook — were engineered to hook kids early, without regard for their well-being and safety.
After several jury verdicts for plaintiffs, Meta agreed on Aug. 26 to a $17.1 billion settlement to resolve lawsuits filed by 47 U.S. states, territories, and Washington, D.C. The lawsuits alleged that Meta deliberately engineered Instagram and Facebook to foster compulsive use among minors and concealed mental health risks.
Critics compared this summer’s verdicts and settlements to social media’s big tobacco moment. But will these settlements have the same effect as the landmark decisions banning cartoon characters in cigarette ads and requiring tobacco companies to pay states directly to defray the cost of caring for smokers?
Terry College of Business Legal Studies professors Lindsay Sain Jones and Tim Samples study emerging tech regulation and privacy. Here are the changes they predict in the wake of this settlement.
1. What is the first thing social media users will see change about the platforms?
Nothing right away. The court has signed off on the settlement, but those changes are deadlines Meta has to hit, not dates when things go live. Within four months, Meta must give teens the option to switch to a non-algorithmic feed. Within six months, it has to roll out a two-hour daily limit, an overnight block on usage between midnight and 6 a.m. and better ways of spotting users under 13.
2. How will this settlement help keep kids safe?
This settlement changes the default setting for teen accounts from a safety feature that had to be turned on to one that’s on automatically unless a parent turns it off. Most safety features that already existed on these platforms required a parent to actively find them and turn them on, and many parents didn’t. Now the restrictive version is what a teen gets automatically.
While this does help, it only applies to Instagram and Facebook. A teen could hit Meta’s two-hour cap and then spend another few hours on TikTok or YouTube, and the research suggests that’s where the risk really adds up.
3. Where will this $17.1 billion go? Will it fund teen mental health treatment?
It’s not actually $17.1 billion unless Snap, TikTok and YouTube also settle with the states and agree to similar financial penalties and product changes. Meta is only guaranteeing about $12 billion up front. The remaining $5 billion is a bet on competitors joining, not a commitment Meta has made.
Where it goes depends on the state, and some of it is mandated. Some states locked in binding minimums, requiring at least half the money to go toward remedial purposes like crisis lines or youth mental health programs. Others gave their attorneys discretion to spend it on any lawful purpose, with nothing requiring it to touch youth safety. And a few states haven’t even finalized their terms yet.
So, there’s no single answer to where the $17 billion goes. It depends entirely on which of the jurisdictions you’re asking about.
3. In the decades after the tobacco settlement, smoking rates did fall precipitously. Do you feel like we’ll see fewer kids addicted to social media in the future?
We’re skeptical, and here’s why. Research on tobacco is clear that the settlement reduced smoking mainly by raising the price of cigarettes, since the companies passed their settlement costs on to consumers. That price mechanism doesn’t exist here. Instagram isn’t going to cost more tomorrow than it did yesterday. Users — their data and their attention — are the core products. So, the dynamics for behavioral change just aren’t aligned.
4. What are the downstream impacts for other digital companies? Will it change the way that companies think about consumer risk?
Probably not.
Unfortunately, we think the lessons for risk and child safety are limited. Meta only guaranteed about 70 percent of this settlement. The rest is contingent on Snapchat, TikTok and YouTube signing on, so the headline number is far from guaranteed. Markets haven’t really punished Meta either. The stock is holding up, and some analysts even called it a clearing event — good news, in other words — because it reduced uncertainty.
That signals that a headline settlement number, even one attached to allegations this serious, doesn’t translate into real financial damage. That means the takeaways are less about product safety for kids than about paying their way out of societal harms.