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Meta is not actually committing to pay the $17.1 billion figure attached to this week\u2019s child safety settlement, at least not on its own.<\/p>\n
California Attorney General Rob Bonta, whose office led the case, put the settlement at \u201cup to $17 billion,\u201d saying Meta \u201cmust make massive transformations that will reduce the risk of harm from its platforms\u2014and will do it within months.\u201d <\/p>\n
His release cited Meta\u2019s own guaranteed figure of $12.7 billion. The District of Columbia\u2019s attorney general, Brian Schwalb, put the guaranteed floor at $12.1 billion, with an additional $5 billion contingent on other platforms joining, for a $17.1 billion total.<\/p>\n
Connecticut Attorney General William Tong\u2019s release cited yet another figure, $12.19 billion guaranteed, and named the contingency pool: \u201cTikTok, YouTube, and Snapchat, each facing state enforcement actions and investigations,\u201d must agree to \u201ccomparable safety terms and monetary relief\u201d before Meta owes the rest. <\/p>\n
\u201cTo TikTok, YouTube and Snapchat,\u201d Tong said, \u201cour expectations are clear. You\u2019re next.\u201d None of the three states\u2019 own releases agree on the guaranteed number to the dollar, and Tong\u2019s is the only one who names Snap alongside TikTok and YouTube as a condition of the payout.<\/p>\n
Meta\u2019s accounting got to the same place with slightly different numbers: a $18 billion total, 70% ($12.7 billion) guaranteed, 30% ($5.3 billion) released only if TikTok and YouTube each adopt a one-hour daily time limit, night mode, and age assurance measures matching Meta\u2019s, and each pays a matching share. Meta even paired the number with a public campaign aimed at those rivals, posting an open letter the same day the settlement was announced. <\/p>\n
In a statement to Fortune, <\/em>Chief Legal Officer C.J. Mahoney said the deal was bigger than a legal resolution. <\/p>\n \u201cI\u2019m pleased to announce that Meta has reached an agreement with a bipartisan group of state attorneys general from around the country on a new set of rules governing teens\u2019 use of social media,\u201d Mahoney said. \u201cOur new Time Limit commitments, Night Mode features, and usage limits during school hours set the right path forward for our whole industry, but this framework will only work if all our peers join us.\u201d<\/p>\n \u201cBecause teens move fluidly across dozens of apps, we need an industry-wide solution,\u201d Mahoney continued. \u201cWe therefore call on our industry peers, TikTok and YouTube, to implement this new framework, right away. As a parent, I\u2019m proud of both the work Meta has done to protect kids historically, and of this new groundbreaking agreement. But its success depends on all other social media platforms following Meta\u2019s lead.\u201d<\/p>\n Neither TikTok nor YouTube responded to Fortune<\/em>\u2018s request for comment on Meta\u2019s call for them to match the framework.<\/p>\n The letter wasn\u2019t Meta\u2019s first attempt to shape this narrative. Since November, Meta has run more than 3,500 unskippable national TV commercials across CNN, Fox, and ABC promoting Instagram\u2019s Teen Accounts, spending nearly $700,000 on a single ad that generated 6.5 million impressions. The campaign paused in January and resumed as jury selection began for the Oakland trial that produced this settlement, timed to a trial in which Meta had warned potential damages could exceed $1.4 trillion. Meta\u2019s market cap is $1.46 trillion, the $17.1 billion settlement is about 1% of that.<\/p>\n The closest real precedent for such a settlement is the 1998 tobacco Master Settlement Agreement, which worked the opposite way: participating manufacturers\u2019 payments get adjusted downward if they lose market share to companies that never signed the deal, protecting signatories from being undercut by holdouts. Meta\u2019s clause does the reverse\u2014it withholds its own money to pressure companies that were never sued in this case into adopting rules voluntarily.<\/p>\n \u201cThere\u2019s definitely nothing really about this that\u2019s all that normal,\u201d Jess Nall, a California litigator on the litigation and arbitration team at Withers who has spent 25 years defending tech companies and their founders, told Fortune<\/em>. \u201cIt\u2019s a huge dollar amount, it sounds really splashy. Although, if you look at it being paid over 10 years and compare it to Meta\u2019s annual revenue and market cap, it\u2019s not really all that big.\u201d<\/p>\n Nall said the clause reinforces an argument Meta has made throughout the litigation. <\/p>\n \u201cAll along, ever since the L.A. Superior Court, they\u2019ve been saying causation can\u2019t be proven because all of these social media users are using multiple different platforms,\u201d she said. \u201cSo it makes sense that they would require participation by these other companies as well as part of this.\u201d<\/p>\n It\u2019s the same causation logic underlying child advocacy groups\u2019 complaint asking the FTC to investigate Roblox over similar allegations. The settlement, Nall added, doesn\u2019t resolve Meta\u2019s broader exposure.<\/p>\n \u201cThere\u2019s still thousands of lawsuits by private plaintiffs that are pending on these similar and same issues,\u201d and conceding platform changes \u201cis tantamount toward an admission that whatever they had in the past was problematic.\u201d <\/p>\n The underlying Section 230 and First Amendment questions, she said, reach \u201cevery AI company and every AI startup,\u201d as Washington debates how aggressively to regulate AI. \u201cThis is a big thing,\u201d Nall said, \u201cbut it\u2019s a speed bump on the long highway that we\u2019re going to keep on driving for a couple of years.\u201d<\/p>\n Philip Yannella, co-chair of the privacy, security, and data protection practice at Blank Rome, called the structure savvy tactical lawyering. <\/p>\n \u201cI notice that one aspect of the settlement is Meta pays $12 billion now, but that increases if other social media platforms also contribute, and you know we\u2019ll see if that happens,\u201d he told Fortune<\/em>, framing the deal as a way to close off \u201cone front\u201d in a \u201cmultiple fronts\u201d legal war that also includes consumer cases, school district lawsuits, Meta\u2019s own fight with New Mexico regulators, and public relations battles.<\/p>\n Rob Lalka, the Albert R. Lepage Professor in Business at Tulane University\u2019s A.B. Freeman School of Business and author of The Venture Alchemists: How Big Tech Turned Profits Into Power<\/em>, compared it to Big Tobacco\u2014with one difference. <\/p>\n \u201cBig Tobacco paid over $240 billion over 25 years,\u201d Lalka told Fortune<\/em>. \u201cAnd that is paying up to $17.1 billion, right? But only if TikTok and YouTube also agree to the same terms.\u201d<\/p>\n Run against New Mexico\u2019s own verdict, he said, the national deal looks thin: \u201cThe New Mexico case\u2014I ran the numbers this morning. It\u2019s like that was like $445 per resident, right? This is about a 10th of that. It\u2019s like 40 to 50 bucks.\u201d<\/p>\n Lalka was skeptical of Mahoney\u2019s \u201cindustry standard\u201d framing. \u201cThey\u2019re trying to claim that they\u2019re taking some sort of industry standard here,\u201d he said. \u201cI would have believed that if they would have taken child protection seriously when the first employees were raising alarm bells about it.\u201d <\/p>\n He tied it to the thesis of his book: Companies like Meta convert the attention they capture into political power, and are still doing it. <\/p>\n \u201cWhat\u2019s happening now is they were forced to, even with all the political power that they have,\u201d he said. \u201cThey\u2019re still trying to wield that power.\u201d<\/p>\n \u201cNo one should be praising someone for what the court orders them to do. Meta is not reforming here, they\u2019re complying,\u201d he said. \u201cThe amount of money that they\u2019re paying out is nowhere near commensurate to the impact that they\u2019ve had on society.\u201d <\/p>\n Wall Street, he noted, seemed to agree the damage was contained: \u201cMeta stock didn\u2019t go down that much today. This isn\u2019t making people bet against Meta.\u201d<\/p>\n For this story,\u00a0<\/em>Fortune\u00a0journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.<\/em><\/p>\n<\/div>\nThe tobacco settlement worked the opposite way<\/h2>\n
\u201cNo one should be praising someone for what the court orders them to do\u201d<\/h2>\n