Meta’s $17 billion teen safety settlement is really a 1% tax — and a play to box in TikTok and YouTube

Meta has settled a lawsuit involving up to $17 billion over 10 years to address allegations that the company designed Facebook and Instagram to addict children, conceal the harms, and improperly collect data from minors under 13. This agreement comes after a federal trial that had barely begun. The potential exposure in the case was massive, leading to a significant drop in Meta's stock price.

While the settlement still requires Judge Yvonne Gonzalez Rogers' approval, it necessitates design changes from Meta, as well as TikTok and YouTube.

The dispute was based on the argument that Meta intentionally introduced features such as infinite scroll, autoplay, push notifications, likes, and appearance-altering filters to exploit adolescents' vulnerabilities and boost engagement. Internal research even documented links between Instagram use and mental health issues like depression, anxiety, and body-image concerns among young people. Meanwhile, Meta publicly downplayed or concealed these risks.

The lawsuit also claimed that Meta unlawfully collected data from children under 13 without parental consent, violating federal children's privacy law. It alleged that these practices breached state consumer protection statutes as well. In the case, California's lawyer highlighted the theory in four words, stating Meta's business model was to "hook" users, "hold" them, "harvest" their data, and "hide" the harm.