Meta Platforms has struck an agreement with a group of 52 US attorneys general to introduce sweeping new safety measures for teenagers on Facebook and Instagram, alongside a payment of around $18bn.
Although the payment of $18bn may seem like a lot, it’s a drop in the ocean for Meta, the owner of Facebook and Instagram, which may have feared a much bigger bill.
For context, Meta is expected to spend around $145bn on AI this year alone.
The market took the agreement well, with shares rising in US trade.
“$16.7bn is a monster settlement by almost any measure, but for Meta it looks more like the removal of a major cloud than the start of a storm,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“The final figure is significantly below some of the numbers being thrown around before the trial, including suggestions that penalties could run into the hundreds of billions.”
Meta said that, as a result of the ruling, it would implement a range of protections that would apply by default to under-18s in participating states, with most of the terms required to stay in place for a decade.
They include a default two-hour daily time limit that teens can only override with a parent’s permission, a “night mode” blocking the apps between midnight and 6am, and notifications muted during school hours.
Teens will also be able to switch to a non-algorithmic feed, likes will be hidden by default, and cosmetic surgery and extreme makeup filters will be disabled. Meta said it would also strengthen age-assurance technology and parental controls.
How these will impact advertising revenues remains to be seen, but in the short term today’s agreement will be seen as a win by all involved.
“There may be some impact on Meta’s ability to monetise its platforms resulting from the restrictions on teenage users’ access to its apps and the extra tools provided to parents and guardians agreed as part of the settlement,” explained AJ Bell head of markets Dan Coatsworth.
“Litigation over these issues is becoming an occupational hazard for the owners of social media platforms, with regulatory changes also seeking to clamp down on the perceived harms they cause. This is very unlikely to be the last word in the legal backlash against the industry.”