Meta’s reckoning has begun. Overnight it lost its first big court fight - and the verdict sets the stage for a legal battering that will intensify over the coming months.
The US government, dozens of states, more than 10,000 individuals, thousands of schools and federal regulators are coming at it from all sides.
At stake is the mental health of millions of children, the distribution of child sexual abuse material, the enablement of human trafficking - and US$196.18 billion in ads.
The full legal picture is vast, so I’m laying it out today in a special free post. Like many great tragedies, it falls into multiple acts - and we are only at the beginning.
And I was joined this morning by former Meta director turned whistleblower and outspoken advocate for improved child protection Kelly Stonelake.
Act One
A year ago, the US Federal Trade Commission went to trial to break Meta up, alleging it bought its way to dominance by acquiring Instagram and WhatsApp for a combined US$20 billion.
Seven months later, Meta won. The judge ruled the FTC had failed to prove Meta currently holds a monopoly - regardless of whether it once did.
The FTC is appealing. If it eventually succeeds in forcing Meta to sell Instagram and WhatsApp, the company loses half its audience and more than half its revenue.
Paid subs can stay abreast of all my coverage of this and all Meta’s court battles.
Act Two
A month later, Australia enacted a world-first ban on under-16s using social media, leading to almost five million child account deactivations across Meta and other platforms.
I’m now tracking more than 50 countries that have followed suit or are in the process of doing so, including Indonesia, France, the US and the UK.
You can check who’s doing what in this interactive map.
Act Three
In 2023, New Mexico filed a 228-page complaint alleging Meta systematically lied about the harms its platforms cause children in order to protect its profits.
That’s the case Meta lost this morning - and the internal emails presented as evidence, which I share below, paint Zuckerberg and Instagram chief Adam Mosseri in a devastating light.
Act Four
In California, a 20-year-old woman alleges she became addicted to YouTube from age six and Instagram from age nine, leading to depression and suicidal thoughts.
TikTok and Snapchat settled before trial. Meta and YouTube fought on - and 13 days after closing arguments, the jury is still deliberating behind closed doors.
This is a bellwether trial: If she wins, the verdict will shape how more than 10,000 similar cases are resolved.
Act Five
This one’s huge.
More than 2,200 cases brought by individuals, families, school districts, states and Native American tribes are consolidated in a federal trial in California set for June.
They are suing Meta, TikTok, YouTube and Snapchat across millions of words of evidence. I am busy reading through them all but they are already shocking.
The school districts argue they were forced to divert limited resources to deal with the mental health fallout of social media addiction - bullying, sextortion, behavioural disruption and student crises.
Five individual cases involving wrongful death and suicide are queued up behind them - and if they succeed, they validate the liability theory for thousands more claims.
Last night’s New Mexico verdict hands them a proven playbook and powerful evidence of what juries think of Meta’s conduct.
Act Six
Separately, a coalition of 42 state Attorneys General have filed a federal lawsuit against Meta for violating state consumer protection laws and COPPA.
This is the federal Children’s Online Privacy Protection Act, which requires websites to obtain parental consent before collecting data on children under 13.
These claims are legally distinct from the school cases. They target Meta’s data collection practices directly, attacking the backbone of its advertising business.
Act Seven
Beyond the coalition, individual states are filing their own suits against Meta and Snap. Last night’s verdict will embolden more to follow.
The attacks are now coming from every direction - the FTC, federal regulators, state Attorneys General, and thousands of individuals, families and schools.
The threat is existential. Every case targets the data collection that underpins Meta’s advertising machine - which accounts for 97 per cent of its revenue.
Future Media Intelligence
Paying subscribers get access to Future Media Intelligence. That’s the deep data collected from financial filings and court papers that explains Big Tech behaviour.
Data like this which shows how reliant Meta is on advertising - and why it is so reckless about collecting data and so unwilling to pay news outlets.
Meta is not a social media network. It’s an ad business that uses public and AI generated posts to create endless inventory. It’s utterly reliant on ads. Look 🫣
But even then, it doesn’t have enough inventory to keep hitting the double digit growth targets that Wall Street demands.
So Meta’s risking the wrath of regulators like the FTC by relentlessly hiking ad prices and ad loads while failing to deliver measurable benefits for consumers or buyers.🫰
Its recent financial filings with the SEC showed that the only place it wasn’t pushing up prices was in Asia Pac - and the reason for that is Australia’s social media ban.
Since it came into force in December, millions of accounts have been disabled.
Why is this a nightmare for Meta?
Because despite its public statements about child safety and taking care, they know kids are the most valuable targets for ads.
And just how valuable - and just how much Meta knows it - was stripped bare in the case that it lost yesterday.
The “young ones are the best ones”
A 2018 internal email stated Meta’s strategy bluntly:
“Short summary is the ‘the young ones are the best ones.’ You want to bring people to your service young and early.”
The $270 lifetime value of a 13-year-old
Meta internally calculated a dollar figure on each teen user:
Meta went so far as to put a “lifetime value” on “a 13 y/o teen” of “roughly $270 per teen ... Spending above that should result in much more scrutiny.”
Teens as “the future of Instagram”
An August 2021 internal email expressed alarm at declining teen engagement:
Instagram’s youngest users, “13 & 14 y/o” constituted “the largest components of the decline” in users, and this trend represented “the most concerning problem from a strategic POV: they are suppose(d) to be the future of IG...”
Mark Zuckerberg’s personal engagement targets
In a December 2015 email to CFO Susan Li and Chief Strategy Officer David Wehner, Zuckerberg set explicit growth targets:
A Facebook presentation titled “2017 Teens Strategic Focus” described Meta’s goal, consistent with “Mark’s (decision) that the top priority for the company in 2017 is teens” to “increase US teen time spent” through Instagram direct and stories.
The “Teen Fundamentals” neuroscience playbook
A May 2020 internal presentation studied how to exploit adolescent brain development for commercial purposes and concluded:
“The teenage brain happens to be pretty easy to stimulate”
The presentation described how Meta’s platforms attract teens’ “novelty seeking mind(s)” by “deliver(ing teens) a dopamine hit” every time they find “something unexpected,” fulfilling their brains’ “insatiable” need for “’feel good’ dopamine effects,” to which “teen brains are much more sensitive.”
It also noted that “Approval and acceptance are huge rewards for teens,” and promoted the use of “DMs, notifications, comments, follows, likes, etc” all of which “encourage teens to continue engaging and keep coming back to the app.”
Preteen strategy as a “big bet”
Even children too young to legally use the platforms were targets:
Meta “formed a team to study preteens, set a three-year goal to create more products for them and commissioned strategy papers about the long-term business opportunities presented by these potential users.”
The complaint notes Meta described these efforts as “big bets” - despite preteens being prohibited from using Meta’s products.
The internal research Meta’s own teen “addicts’ narrative” confirmed
Meta’s own “Teen Mental Health Deep Dive” research confirmed to Zuckerberg that the addictive design was working as intended, finding that teens had developed:
“an addicts’ narrative about their use” - they “wish they could spend less time caring about it” but “can’t help themselves.”
Profiting from sex content and human trafficking
Even the illegal activity on Meta’s platforms generated revenue. One undated internal document acknowledged Meta faced “reputational risk” from “accrued ad revenues associated with HT (Human Trafficking).” Another document from around 2020 stated:
“We know we don’t want to accept/profit from human exploitation. How do we want to calculate these numbers and what do we want to do with this money (ie from ad spend)?”
It’s a lot to take in. That’s why an ever-growing army of Meta whistleblowers, investigative journalists, researchers and regulators are banging the drum so loudly.
I urge you to read the revelations, and digest the numbers and ask the question: Do we really need social media if this is the price?
When advertisers realise that there’s a reputational risk to spending their marketing budgets there, it will free US$196.18 billion for rivals to build better, safer alternatives.
The courts and governments are doing the right thing, but the next step is up to this lot… 👇
