Zuck settles down

For once, we’re writing about tech news that has nothing to do with AI. Today, Meta agreed to pay up to $18 billion in a proposed settlement with 48 state attorneys general, wrapping up a major trial over whether the company’s technology was harmful to children.

In response to the verdict, Meta will have to make a slew of changes to its platforms:

• The company will implement a two-hour cap for underaged kids using Facebook and Instagram, and a chronological feed instead of a virality-optimized algorithm.
• “Night mode” will block underaged users from the platforms between 12am and 6am, and stricter “enhanced age assurance measures” will prevent younger children from getting access to the platforms.
• Meta also agreed to appoint an independent auditor to monitor compliance.

Wait, what?

In a frankly confusing agreement, Meta will pay out only 70% of the settlement unless TikTok and YouTube (owned by Alphabet) also agree to set one-hour limits for users under 18, and each pay the states associated with the lawsuit $5.3 billion. Meta will only have to pay the last 30% of the settlement if the other two companies consent to the terms.

The agreement still has to be approved by a judge, and a settlement amount will be distributed to the states in installments over a decade.

Meta shareholders brush it off

Even while the settlement forces Meta to make some significant changes, shareholders seemed more relieved by the certainty of settlement than afraid of unforeseen consequences. After all, while that $18 billion deal is no small sum, it pales in comparison to the $1.4 trillion in damages that the states were trying to force Meta to pay. That’s why shares of Meta actually climbed 1.07% today.

A long road ahead: This settlement doesn’t wipe out the thousands of other cases being brought nationwide against Meta and other social platforms by school districts, state attorneys general, and teens themselves. For investors, this is less of a resounding victory, and more like the first step in a relentless slog of accusations and bad PR.—LB