Meta Is Back on Trial in California

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Meta prepares to face off in court against four states seeking over a trillion dollars in damages for social media's harm to kids. Plus, retail giant Costco prepares to enter the Medicare market and minerals companies lean in to red, white and blue branding in a bid to score federal funding.

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It's Tuesday, August 18th. I'm Luke Vargas for the Wall Street Journal. And here is the AM Edition of What's News. The top headlines and business stories moving your world today.

Lawyers for Meta will be back in federal court today in Oakland, California for the start of the latest trial accusing the social media company of contributing to a crisis in youth mental health. Of the thousands of lawsuits that Meta faces over child safety on its platforms, the potential financial damages involved in the case, brought by dozens of states, could be the most consequential.

Meghan Bobrowsky (1:25)

This trial is about child safety and harms to children that have occurred on Meta's platforms, and ultimately whether Meta is responsible for those harms that have occurred.

Luke Vargas (1:35)

That's reporter Meghan Bobrowsky, who covers Meta from our San Francisco Bureau. In the Oakland trial, California, Colorado, Kentucky, and New Jersey will be acting as plaintiffs with 25 other states expected to have trials later.

Meghan Bobrowsky (1:48)

This case is significant because it could have massive consequences for the company. The four state attorneys general who brought the case are asking for more than $1 trillion in damages. For reference, Meta's market cap is roughly $1.5 trillion.

So asking for more than $1 trillion is basically asking for damages that are equivalent to the entirety of the company.

Luke Vargas (2:10)

Journal National Legal Affairs reporter Erin Mulvaney says the states accuse Meta of knowingly designing features on Instagram and Facebook to addict children and teenagers, claims that if proven in court could see the company forced to make major changes.

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The lawsuits allege that Meta deployed features such as infinite scroll, push notifications, autoplay, light counts, and engagement-driven recommendation algorithms specifically engineered to exploit adolescent brain chemistry and drive compulsive behavior.

The states say that Meta prioritized engagement over minor safety, contributing to mental health issues such as body dysmorphia, depression, and a host of other things. This is an important lawsuit because in the past, it's been difficult to hold online internet providers liable for anything that's third party content on their site. So these actions have taken a way around that by actually going after how the platform designed its products and in this case also violated consumer protection laws in various states. But the company has said that they have spent years trying to protect teens and young people on their platforms in a way that has actually reduced user engagement. They've always said that these lawsuits are without merit and have continually fought against them and denied having intentionally designed products to hurt young people. The lawsuits allege that Meta deployed features such as infinite scroll, push notifications, autoplay, light counts, and engagement-driven recommendation algorithms specifically engineered to exploit adolescent brain chemistry and drive compulsive behavior.

The states say that Meta prioritized engagement over minor safety, contributing to mental health issues such as body dysmorphia, depression, and a host of other things. This is an important lawsuit because in the past, it's been difficult to hold online internet providers liable for anything that's third-party content on their site. So these actions have taken a way around that by actually going after how the platform designed its products and in this case also violated consumer protection laws in various states. But the company has said that they have spent years trying to protect teens and young people on their platforms in a way that has actually reduced user engagement. They've always said that these lawsuits are without merit and have continually fought against them and denied having intentionally designed products to hurt young people.

Luke Vargas (5:00)

Back in March, a jury in New Mexico found that Meta willfully violated state consumer protection laws. With a judge earlier this month ordering the company to pay more than $900 million and limit the time that young people in the state can spend on its apps.