Meta under the tube with Musk
Three American court orders indicate mounting social and business pressures on three social media sites, although one of them considers itself a streaming platform. In social terms, two of the orders, against Meta (Facebook, WhatsApp, and Instagram) and YouTube (Google), accept that social media influences the children, makes them addictive to online messaging, and hurts them. In business terms, the third one, against X (Twitter), agrees that advertisers can boycott a platform, and it does not logically lead to unfair competition. In some ways, the legal trio establishes a growing thinking among policy-makers.
On three consecutive days this week, the rulings pushed the social media sites on the backfoot, much like what the legal proceedings did with the global tobacco firms during the 1990s. Like in the case of the latter, when cigarettes were banned from the public arena, advertising was restricted, and medical warnings appeared on packets, the three weekly judgments against social media will mark the beginnings of how we will view social media apps in the future. “This is just the beginning,” claimed a trial lawyer, and the orders indicate that the negative sentiments have "finally boiled over,” according to a researcher.
First, on Tuesday (March 24), a jury in New Mexico stated that Meta needs to pay $375 million because its products led to “child sexual exploitation, among other harms.” The next day, another one in California imposed a much-smaller $6 million fine on Meta and YouTube as they “deliberately designed addictive products to hook young users.” This is reminiscent of the attacks on the tobacco firms, which knew that cigarettes were addictive but denied the claims, and aggressively pushed the products in the marketplaces. More cases are likely to follow in the US, and possibly other nations.
On Thursday (March 26), a lawsuit by Elon Musk, the owner of X, and other new-age and space-age firms, which accused some advertisers of conspiring against X, and illegally boycotting the platform, was thrown out by a US district judge, Jane Boyle. The judge said that X could not prove that it suffered harm under the competition laws due to the advertising withdrawal by global marketing giants such as Unilever, Mars, and Orsted. There was no conspiracy or concerted efforts to deny revenues worth billions of dollars to Musk’s X.
According to a media report, the Californian jury found that the social media platforms acted with “malice, oppression, and fraud.” In a joint statement, the lead lawyers, who represented families, schools, and others, said, “This verdict is bigger than one case. For years, social media companies have profited from targeting children while concealing their addictive and dangerous design features. Today’s verdict is a referendum,
from a jury, to an entire industry, that accountability has arrived.” The term referendum emerges from the fact that 10 out of the 12 jurors voted against the social media sites and, according to an expert, “heard six weeks of testimony, sat through 44 hours of deliberation, and reached a resounding conclusion.”
Meta and YouTube disagreed with the orders, and stated that they would file appeals. According to YouTube, the Californian jury misunderstood its business operations, and designated it as a “social media site,” while it is merely a video-streaming platform. Meta’s reaction was detailed and categorical. “Teen mental health is profoundly complex, and cannot be linked to a single app. We will continue to defend ourselves vigorously, as every case is different, and we remain confident in our record of protecting teens online,” said a spokesperson. It took relief from the fact that it was not a unanimous verdict.
What is crucial is that the legal backlash was partly established via the internal documents of Meta and YouTube. One of them from the latter asked a question if the firm measured “wellbeing,” and answered that it did not. The ones from Meta accepted that the “young ones are best ones,” and targeting them was a good “gateway” to entice other family members. Indeed, an email from an employee admitted that “targeting 11-year-olds feels like tobacco companies a couple of decades ago.” What is worse, an internal Meta memo read, “Data shows that Instagram had become the leading two-sided marketplace for human trafficking.”
For many observers, especially those in their 50s and above, this reminded them of the tactics of the tobacco firms. Internal memos, studies, and communications proved that they knew about the addictive and extreme medical effects of cigarettes. Yet, they refused to share them, junked them, and indeed used them to improve market shares, especially among the younger smokers. In public, they financed research that proved minimal or ambiguous links between smoking and cancer, and that smoking does not cause the disease.
Musk’s challenges seem different, although they are connected to the overall operations and profitability of social media. When he took over X in a controversial manner, and a recent order agreed that he misled investors, and caused them losses, he made sweeping changes that were unacceptable to users, experts, and even advertisers. Within a year, ad revenues fell by more than half. His lawsuit claimed that the advertisers conspired against their self-interest to withdraw money, which violated the antitrust laws. The firms withheld advertising by following codes set by a global alliance, which stank of conspiracy.
However, the district judge disagreed. She maintained that the global alliance was not involved in the advertising process. The latter did not buy ad space from X, and sell it to advertisers. It did not tell X not to sell independently to the advertisers. “The very nature of the alleged conspiracy does not state an antitrust claim, and the court therefore has no qualm dismissing with prejudice,” said the judge. The advertisers had argued that they acted independently, and were not dependent on the global alliance for such decisions.
But what is important in the three orders is that it will propel the policy-makers to impose restrictions on social media’s access to children, as well as advertising that enables illegal and harmful content. In India, some of the states have introduced laws to ban such access to the youngsters. The Economic Survey advocated a national policy. At the same time, lawyers believe that “if they bring enough cases, and keep winning, eventually it will be simpler for the companies to change their platforms than to keep fighting in court.” In the US, advocates focus on a multi-pronged strategy to urge the Congress to pass laws, create attention through public campaigns, and file more lawsuits.
