In 1994, more than 40 US states came together to sue one of the most powerful industries on Earth: big tobacco. The suits brought together diverse claims centred on tobacco companies’ misleading advertising and contribution to a mounting public health crisis. They ended in a negotiated settlement with the US government, in which the companies agreed to pay more than any industry ever, and the states agreed to drop a large portion of their claims.
Thirty years later, smoking is on the rise in the developing world, the companies involved remain profitable and the global tobacco market is worth nearly $1tn. On Tuesday a major trial against Meta began, in which 29 states have brought the claim that the parent of Facebook and Instagram designed a deliberately addictive product and targeted it at children. That trial follows a bellwether case earlier this year, in which a Los Angeles jury found the social media company – and YouTube, its co-defendant – liable for deliberately designing an addictive product that had deleterious effects on the mental health of a single young claimant.
That case, which awarded the claimant $6m, opened the door for this and other litigation. At about the same time, Meta was forced to pay a total of $942m in a separate trial in New Mexico. The New Mexico case focused on whether the company was aware of – and took measures to prevent – child sexual exploitation on its platforms.
This next wave of litigation will focus less on child exploitation, and more on the fundamental design of Meta’s platform: the algorithm that underlies which content it shows to users and how. So, how far could the litigation go? Kate Winick, an analyst at Forrester, said the trial was “potentially the end of social media as we know it” and, while a ruling against Meta would not permanently kill the industry, it could “significantly reduce usage over the long term”.
The figures that Meta and other social media companies could stand to pay are immense. The attorneys general are seeking $200bn in damages, the amount of revenue the company takes in a year. Meta has said in a court filing that they could amount to $1.4tn, which is just short of the company’s market capitalisation.
The judge in the case has called the company’s estimation “unreasonable”. Perhaps a more realistic risk for the company is the potential for permanent changes to the way its social networks operate, which are the engine for its entire business. Meta is essentially a digital advertising company.
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