Meta is back in court

**Steph Chalmers** (0:00)
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**Carrington Clarke** (0:37)
Meta, the parent company of Facebook and Instagram, is defending itself in US court against claims that it designed deliberately addictive products aimed at children. So what's at stake in this bellwether case, and what happens if Meta loses? And financial intelligence agency, Austrac has made hundreds of referrals in connection with an investigation that's uncovered what they say is coordinated mortgage fraud. So how big a problem is it? And what happens next?
Welcome to ABC Business Daily.

**Steph Chalmers** (1:13)
And I'm ABC Business reporter Steph Chalmers.

**Carrington Clarke** (1:16)
Steph, thank you for joining me. We're over here in Australia, but a lot of the world's attention is on a courtroom in California. It's wrapped for the first day, and this is this kind of blockbuster case against Meta. This is one of the world's most important companies. Billions of individuals use its products. This is across Facebook, across Instagram, across WhatsApp.
And this follows on a couple of other cases that we've already seen this year. This keeps being referred to as potentially the big tobacco moment, where a very important company in a very important industry is potentially held accountable for what critics say, are deliberately addictive products that are causing great harm. What did you make of the fact that this court session has happened? 29 states out of the 50 in the United States, both Republican and Democrat states have joined this action. The fact that this action has been brought against Meta, and what it potentially could mean for that company in particular, but also the industry more broadly.

**Steph Chalmers** (2:15)
As you say with this, it really is the world is watching because there's people all over most countries on these platforms, not only Meta-owned platforms, but of course things like Snapchat and TikTok now. We know those other companies will of course be watching very closely themselves because this is really the first action of this scale and magnitude that we've seen.
They will of course be wanting to know how this goes. As you say, it's really the scale of this compared to what we've seen so far, which are some individual actions that have been brought and there have been findings against some of the tech giants in those cases, but this really goes to that level of potentially a business model at risk if we see this case succeed against Meta.

**Carrington Clarke** (3:05)
Yeah, and there seems to be a little bit of confusion or contradiction about exactly what the penalties being sought are. There has been a suggestion from Meta that it could be the entire value of the company could be the penalty that they're looking at. We're talking more than a trillion dollars plus in US terms. Now, one of the attorney generals from one of the states suggested, no, we're not looking at that much money, but it could potentially be a couple of years of profits when you're a company the size of Meta, that's a huge amount of money. But I think what's more important is if the jury and the judge find against Meta in this instance, whether or not they will want to actually put restrictions or put in conditions on the way that Meta designs its products. So the crux of this case is whether or not that the company has designed their products in a way that they knew would be addictive, would and would do harm to young people, or that maybe they didn't design it on purpose to be like that, but they should have known that these products were causing harm and should have done more to ensure that they weren't.
It is a difficult question because obviously if you're a business and you're in the business of advertising, what you're trying to do in part at least is keep people on your platforms as long as possible, right? So if you look back at old kind of old legacy media, if you're a television network, you're trying to keep people watching, you're trying to make your products so engaging that people don't switch the channel and that they watch the commercial so you can sell that. And when it comes to kind of social media, the Instagram Facebook model, what you're trying to do is keep people utilizing it, whether or not that's kind of clicking through reels and then having ads in between it or just spending time on that platform so that you can sell ads to those people and that's what you're trying to do. Now, Meta's argument has been that they have put strategies in place in order to make sure that children weren't using their products first of all, that there are age restrictions, but also that maybe earlier on, they had had a metric which is about just how much time was being spent, but they moved away from that model.