NYT (“Meta to Pay Up to $17.1 Billion in Landmark Settlement Over Social Media Addiction Claims“):

Meta on Wednesday reached a landmark settlement with 47 states, the District of Columbia and U.S. territories, agreeing to pay up to $17.1 billion in penalties and make major changes to its products over claims it endangered children with addictive social media platforms.

In a dramatic capitulation, the owner of Facebook and Instagram agreed to the financial penalties for violating federal child privacy and states’ consumer protection laws, the states announced. Meta also agreed to limit how long teenagers can spend on its platforms and to bans on features that stoke mental health issues, striking at the heart of the company’s business of engagement for advertising.

[…]

The settlement effectively ends a bellwether federal trial in the U.S. Northern District of California in Oakland, where California, Colorado, Kentucky and New Jersey were seeking roughly $200 billion over accusations that Meta harmed children. The states filed their agreement with Meta on Wednesday morning in that court, and Judge Yvonne Gonzalez Rogers approved it.

Separately, Meta said on Wednesday that it settled with Texas for about $1 billion over similar allegations. The company still faces numerous other lawsuits from school districts and individuals, some of which are scheduled for trial in the coming months.

Meta’s stock rose on the news, closing up just over 1 percent. The company is valued at $1.47 trillion and most recently generated $60.8 billion in quarterly revenue.

What a minute! The company agreed to pay out a landmark settlement, and its stock valuation . . . rose?

The settlement could signal an inflection point for a social media industry that has largely escaped regulatory scrutiny over the harms its products have caused children. The amount, paid in installments over 10 years, is one of the highest ever reached by a tech company to states.

Oh. So, it’s just $1.7 billion a year (max). Its annual profit last year alone was $60.46 billion. Its stock valuation is $1.45 trillion.

The full value of Meta’s payout depends on whether other social media companies also settle with the states and agree to financial penalties and product changes. Meta will initially pay about $12 billion. It will pay an additional $5 billion if Snap, TikTok and YouTube also settle with the states and agree to financial penalties and product changes.

The others will have little choice but to join. More on that in a bit.

POLITICO (“Why Meta’s courtroom concession is a BFD“):

Meta’s multibillion-dollar court settlements with U.S. states Wednesday set the stage for groundbreaking changes to protections for children across social media — a realm where Congress has tried and failed to regulate.

[…]

But its real power would come from the age limits and other safety guardrails that Meta would impose on its Instagram and Facebook platforms, terms that could someday extend to companies such as Google, TikTok and Snap.

Indeed, Meta immediately issued a public plea for TikTok and Google-owned YouTube to “join us and state attorneys general in adopting this new standard, to ensure teens use social media in a healthy and responsible way.” Meta is launching a campaign to “shame” other companies into signing on to the provisions, according to a person with knowledge of the plan who was granted anonymity to disclose private conversations.

Any resulting agreements could force substantial changes to platforms most Americans access daily — after years in which the online giants have mainly had to worry about regulations from California and Europe.

[…]

But some people in the tech industry “are completely rolling their eyes” at the deal, a person at another company told POLITICO, adding that Meta is agreeing to terms that would harm other online firms.

“Fundamentally, this just feels like a PR stunt,” said the person, who was granted anonymity to speak candidly about reaction within the industry. “They’re describing this as an agreement. It’s not an agreement if they have a gun to your head. They want to bring everyone down because they’re fundamentally unable to defend their practices.”

TechDirt’s Mike Masnick goes further: “Meta Just Paid Nearly $17 Billion To Make Sure It Gets To Write The Kid Safety Rules For Every Other Social Media Platform.”

Meta has been desperately seeking a path to regulatory capture for quite some time now. It’s been practically begging for Congress to pass child safety legislation that only the largest companies (like itself) could comply with. Indeed, Meta has done this before. It went against the rest of the internet industry in embracing FOSTA, again to try to create a regulatory moat. So this shouldn’t be surprising.

Meta’s failed forays into the “metaverse” and AI have shown that it’s been pretty consistently losing the innovation race, and the government granting it a regulatory moat that smaller competitors can’t cross would be a godsend.

And it’s even better when it can be done in a way that looks like Meta “losing” a lawsuit.

So that’s what Meta gets here. They “settle” the lawsuit so the AGs and Meta haters can all claim that they’ve “protected the children.” Meta pays out over a decade — enough that it’s taking a $10 billion legal charge in Q3, which stings for a bit but will mostly be forgotten by next year. Meta can easily eat the cost. And then Meta agrees to implement a bunch of kid safety features, most of which we have no idea whether they actually protect any kids. Notably, a legislature could not have mandated most of these features without running straight into the First Amendment — but coming out of a settlement, they carry the imprimatur of law anyway (more on that in a moment), and the structure of the agreement makes it so that Meta has to actively encourage Google and TikTok to take identical steps, thereby setting in concrete what steps any platform will have to take to be considered following “best practices” and therefore acceptable to most of the country’s Attorneys General.

He does a detailed breakdown of the “child safety” features being proposed, and argues that, while some of them might be good for some children, they’re bad for other children. I haven’t thought about them long enough to have an opinion worth sharing.

But I do agree with Masnick’s main (albeit non-headline) point:

[T]he whole point of doing this as a “settlement” is that everyone involved knows full well that no government could mandate these feature changes without violating the First Amendment. But now that it’s in a “settlement” the courts may need to explore if these choices — which Meta could make freely on its own — suddenly have become a “state action,” implicating the First Amendment.

[…]

That’s not to say that there aren’t righteous cases brought by Attorneys General, but there are so many examples of them being much more about getting headlines than actually making people safer. And the simple fact is that these efforts are so resource intensive, so expensive, and so draining that it’s no surprise that most companies end up “settling” by agreeing to do things that the government simply cannot force a company to do. But because it’s a “settlement” people act like it’s not the government doing it.

In this case, given some of the recent court decisions, it’s no surprise that Meta would strike some sort of settlement. As these cases continued, the headlines would only get worse for the company. And Meta deserves some bad headlines, but as I’ve discussed, many of the bad headlines in these cases involved lawyers and the media taking things way out of context. The classic case with Meta is that many of its efforts to study how to make its platforms safer were used against the company as proof that “they knew!” their platforms were unsafe!

The lesson for the rest of the tech industry is grim and unambiguous: never study whether your own platform is causing harm. The mere existence of the research will be turned into Exhibit A that “they knew,” both in the court of public opinion and in actual courts.

[…]

Meta and the states will appoint an “independent” auditor for five years, and the age assurance system gets tested annually to meet certain thresholds. But it’s important to look at what’s actually being audited here. It’s whether or not Meta is implementing the things it’s promised to do, not whether any of those things actually work.

But now these are, effectively, mandated by law. Even though if Congress or the states had passed a law requiring these, it would almost certainly be thrown out as unconstitutional under the First Amendment.

[…]

But now they’re effectively government mandated.

In theory, this could open up room for other platforms to come in and sweep up the youth market by not implementing these same features. But the nature of this agreement is that if the state AGs suddenly feel like any platform is becoming too popular with the kids, it can point to this agreement and call it “industry standard” or “industry best practices” to insinuate that other companies not doing the same are deliberately choosing to keep kids unsafe.

Indeed, within the agreement there’s a bit of weirdness, in which Meta has to push for “industry wide adoption” which is currently defined as YouTube and TikTok, but which the agreement makes clear could include any new social media platform if such a new platform meets the thresholds. In other words, Meta is basically being forced into guaranteeing this settlement creates an industry-wide standard.

For decades, the federal government has been forcing states to do things that it has no Constitutional authority to force states to do by setting doing those things as conditions for receiving federal funding. Because states can technically opt out, it’s legal.

Masnick is almost certainly right that the states would lose on First Amendment grounds if they tried to impose these restrictions on Meta’s platforms by legislation. But Meta can impose these requirements on itself—and effectively on its competitors—in response to state coercion.

As to the impact, it’s too soon to tell. Doubtless, a lot of children have suffered real harm from social media’s attention-sucking algorithms.

Still, as the Electronic Freedom Foundation argues,

Under this settlement, young users will now have less access to Meta products, and a lesser ability to exercise their rights to speak, access information and art and culture, associate and form communities, and play. The settlement also embeds age assurance into every product, mandating the collection of even more personal information from users of all ages; this enshrines Meta’s harmful surveillance into law, and it will compromise users’ privacy and anonymity while increasing their exposure to data breaches and government data requests. And the data minimization and security measures don’t keep states from using data collected under the agreement for other law enforcement purposes – which could include things like criminal investigations of abortions or gender-affirming care.

Masnick also cites Fight For the Future:

Big Tech does pose harm to our kids through its business practices and exploitation, but pushing for more censorship, age-gating, and surveillance of young people at the hands of the same Big Tech companies that have already harmed young people is not the answer. Online ID checks when implemented put vital information behind age-gates, stamp down teenagers’ right to speak, and expose all of us to even more of our data being collected, hacked, and leaked. Meta knows that managing this amount of personal information and enforcing these agegates will be messy and that’s why they are seeking to offload the burden to anyone but themselves, while being seen to comply by the public and lawmakers. Instead of actually damaging their exploitative business model, this result allows Meta to bring everyone else down with them, from app stores to other social media companies. We feared that these lawsuits would manufacture consent for invasive age verification and content controls and our fears have been proven correct. We will continue to oppose online ID checks everywhere and be on the watch for more censorship creeping into Meta’s platform.

Masnick piles on:

Age assurance is a privacy nightmare. Enshrining it as the industry standard means the end of meaningful online anonymity, and it “forces” Meta to collect more data about all of us — including adults — while handing the states a pipeline to that data for whatever else they decide it’s useful for.

Which, to me, is really the rub. The only way for a company to “protect” children is to affirmatively identify who is using a given device at any moment. Which means, adults have to prove that they are adults—which means supplying official identification materials, submitting to facial recognition software, and other invasions of privacy.

Back to the value to Meta in agreeing to this settlement. Masnick points to this requirement:

With respect to Potentially Harmful Reported Content submitted in English or Spanish, Meta SMPs shall maintain processes designed to permit Teen Users to receive a response indicating Meta’s decision on the report within 6 hours in at least 90% of cases.

and observes,

This is also a perfect example of the kind of standard that only a giant can meet. A six-hour turnaround on 90% of reports is achievable when you have thousands of trust & safety staff and a decade of tooling. For a startup with four employees and a Discord server, it’s a fantasy — and now it’s the benchmark against which every AG will measure them.

He concludes,

But for all the people “celebrating” this as a win “against” Meta, you’ve been fooled. Meta just cut a deal to put itself in charge of how social media works going forward. As Justin Maurer wrote on Bluesky, this is Meta taking a “please regulate me Daddy” approach to the government, and getting exactly what it really has been asking for.

We still don’t have any actual evidence that this will help anyone, let alone every kid. The state AGs didn’t have to prove how this would help kids. Meta didn’t have to prove it. The judge won’t be asked to. It’s just taken on faith. Meta offered this up, the AGs okayed it… and it all becomes a grand experiment on kids.

You can argue that these feature changes sound like they should help kids. Limiting access to two hours a day (unless parents grant more, which many will), lights out at midnight, disappearing like counts — these all sound like they’ll help some kids. But if it turns out that locking kids out of these systems actually pushes the most vulnerable ones to darker places with no trust & safety team at all, you won’t hear about that from Meta or the AGs.

We just spent three years teaching the entire industry that if you do research on child safety, you’ll have it held against you. Do we really think that all of this is going to actually enable anyone to figure out what works to help actual kids?

Meta bought itself a moat. The AGs bought themselves headlines that will be useful next election season. And every teenager in the country was just automatically enrolled in an untested experiment. There’s a five year independent auditor requirement to confirm that Meta follows the rules. But not to see if the rules work.

We’re about to find out, I guess.