Regulators and online safety advocates have called Meta's multi-state $18 billion agreement a turning point. Furthermore, both Meta and state attorneys general have called on TikTok and YouTube to make similar changes.
However, it remains an open question whether this agreement will fundamentally change the business of one of the world's largest technology companies. The $18 billion figure is insignificant for META, whose valuation approaches $1.5 trillion, and represents only a small fraction of what states demanded during lawsuits. Nevertheless, Meta still faces hundreds of other similar cases.
Pre-trial proceedings uncovered internal documents indicating that Meta was aware of the risks its platforms posed to youth, despite public statements about commitment to safety principles. Some online safety advocates believe the deal should have been more radical to undermine Meta's core advertising-based business model, and they are now calling on Congress to codify these changes into federal industry legislation.
It is clear that Meta can no longer independently assess its work in youth safety. An independent auditor will verify the implementation of the required changes—a critical step demanded by parents and activists for years.
California Attorney General Rob Bonta told CNN's Richard Quest on Wednesday: 'This is transformative. There is a real, long-term mechanism of enforcement and protection here.' Meta did not admit guilt as part of this settlement.
In a statement on Wednesday, Meta's Chief Legal Officer C.J. Mahoney said that 'the structure we agreed to will give parents the ability to easily manage how their children access our platforms,' adding that the changes 'pave the right way for our entire industry.'
Among the changes for users aged 13 to 17 are a daily time limit of two hours on Facebook and Instagram, a 'night mode' that makes apps unavailable from midnight to 6 AM, and a 'school mode' that restricts notifications during school hours. Only parents can change these settings.
Additionally, Meta will by default disable 'like' counters on teen content and beauty filters with 'extreme makeup.' Teens will be able to turn off autoplay so videos do not start automatically when opening apps, and choose a feed that is not based on algorithmic recommendations.
Meta has six months to implement these changes. Lori Schott, founder of the parent advocacy group Parents RISE!, considers these changes a 'step in the right direction,' but wishes Meta had implemented them sooner, without the need for litigation.
Schott told CNN that her daughter Annalee died by suicide in 2020 at age 18 after Meta's platforms repeatedly showed her harmful content. She emphasized the importance of mental health aspects, such as the removal of beautifying filters and 'like' buttons, which affect many young girls. Schott also filed a personal lawsuit against Meta, which is pending.
Nevertheless, Sebastian Mahal, co-chair of the youth safety organization Design It For Us, noted that while the agreement includes some 'significant' changes, others are insufficient. For example, although teens can voluntarily switch to a non-algorithmic feed, the personalized version, which benefits Meta's business, remains the default. Mahal stated: 'They really give users visibility into another experience. But we would prefer these safer options to be automatic for users.'
The agreement also contains several exceptions. According to court documents, 'Night mode' will still allow messages to be received on Instagram and Facebook even when the apps are blocked for teens.
The effectiveness of many changes will largely depend on Meta's ability to accurately identify teenage users. The agreement requires Meta to implement age verification software, either proprietary or third-party. Meta stated that it is 'investing in even stronger technologies' to identify teenagers who misrepresent their age and to keep users under 13 out of the apps, but also asserts that app stores should bear some responsibility for verifying user ages.
Previously, Meta supported legislative proposals requiring age verification in app stores, while Google and Apple opposed it. Syracuse University communications professor Alexis Shor Inger suggested in an email comment: 'Ideally, Meta would decide that the required design changes within this agreement would benefit all users, not just children, but it is quite possible that this will not happen, given the profit Meta derives from retaining its adult users.'
Michael Coffey, a defense attorney and founder of Coffey Modica LLC, who was not involved in the Meta case, called today's agreement a 'big win for (Meta CEO) Mark Zuckerberg' financially. This is a small fraction of the amount Meta could have been forced to pay—up to over $1 trillion, according to the company—if it had lost in court against just four state attorneys general. Meta will pay $18 billion in annual installments over ten years, which will go toward youth mental health and online safety education programs in the states.
Meta also stated that it would only pay 70% of the agreement amount if TikTok and YouTube did not agree to pay about $6 billion each and make similar changes. Bonta reported that the states are prepared to sue these companies if necessary to secure their participation in the deal. TikTok and YouTube did not respond to requests for comment.
A larger issue for Meta is what will happen if it loses hundreds of cases from private individuals, school districts, and other states that remain. The company acknowledged in its latest earnings report that youth safety litigation carries the risk of 'material losses.' Florida Attorney General James Uttmyer stated on Wednesday that his state did not join the agreement because 'the payments are negligible compared to the deep harm caused by Meta's profitable addictive feature to children.' He added: 'We will see them in court.'
If teens spend less time in Meta's apps due to the changes, it could negatively impact the company's profits. Forrester analyst Kate Vinnick noted that research shows the company earns about $11 billion annually from minors, though she added that 'Meta is a very large business with many ways to offset this revenue.' Analyst William Blair Ralph Shackart noted that the deal largely removes uncertainty regarding what a potentially higher penalty might have been. Meta's stock (META) closed up slightly more than 1% on Wednesday. Shackart wrote in a research note that especially as Meta increasingly moves toward artificial intelligence, investors will likely now 'pay more attention to the company's fundamental metrics... which remain strong.'