Meta’s $5 Billion Bounty

**Eriq Gardner** (0:02)
I think that, you know, we're definitely going to see an expanding scope of litigation. In a way, this litigation is kind of a substitute for national rules.

**Peter Hamby** (0:17)
Welcome to The Powers That Be Daily, Puck's podcast focused on the intersection of Wall Street, Washington, Silicon Valley, and Hollywood, and the players who run it all. I'm Peter Hamby. It's Wednesday, September 2nd. Today, I'm joined by Eriq Gardner, who explains how the courts became the main battleground for regulating big tech. The federal government failed for years to put up any guardrails around social media platforms. But Meta's multi-billion dollar settlement agreement with state attorneys general showed that lawsuits are the way, and there are no signs that legal fights against Meta and other platforms are slowing down.
We'll discuss all that and much more on today's episode of The Powers That Be.
Happy Wednesday everybody and welcome to The Powers That Be. I'm joined today by my colleague Eriq Gardner, who had been wanting to have on for a few days to break down the landmark Meta settlement, where they're going to pay billions of dollars in penalties and agree to change how teens can use their products. This comes after an explosion in litigation, class action lawsuits, lawsuits by attorneys general around the country against not just Meta, but pretty much every big social media platform, TikTok, Google, Snap, etc. Eriq, I do want to begin with all of those lawsuits because I think it's important to think about tech regulation now in a different way than we did even just a few years ago. Obviously, the big technology platforms have been protected for years and years and years by Section 230 of the Communications Decency Act. A lot of plaintiffs and parents and politicians decided to go a different route after years and years of failing to regulate these platforms at a federal or state level, and litigation has become the way. Did I explain that properly? One, and then two, how did this Meta lawsuit come about specifically among all of the other lawsuits out there?

**Eriq Gardner** (2:27)
Yeah, so I think you're absolutely right. I mean, as you correctly noted, Section 230 has really held a lot of plaintiffs back over the years.
And what's really changed is that a lot of these plaintiffs have seized on this theory that the product itself was designed with flaws.
And so that it went outside the speech realm. It was stuff that was addictive to kids and was harming them mentally. And at least at the front end of things, judges had started ruling that Section 230 wasn't going to keep these cases from going to trial. This particular case was brought by the state AGs. And it was in the midst of trial. The trial had just begun. We were just about to get testimony from Mark Zuckerberg, from Adam Mosseri and other leaders at Meta. This was going to be a six-week trial. And looking at potentially massive amounts of damages. I mean, Meta in its own brief calculated the potential damage bill at being $1.4 trillion, which was basically its market cap. So they had financial incentives to move on this settlement. But I think more than that, they saw that this was a time when judges and juries were going to start writing rules for them. And so they wanted to get on the front end of things. This does not settle all the litigation by any stretch of the imagination. There's more litigation to come. But this is an important part of the way that it feels like it can move to the next step.

**Peter Hamby** (4:06)
So it's still possible, at least in Meta's case, and we'll get into the terms of the settlement and how they said they would pay even more, but only if YouTube and TikTok and Snap also agreed to some of the same regulations or legal agreements that they did. But it's still possible that Meta, like this doesn't erase all future lawsuits against Meta, correct?

**Eriq Gardner** (4:28)
Oh, no, there's a lot of lawsuits going on right now. First of all, the state of Florida is opting out of the settlement, so they're going to move forward with their own case. New Mexico has already gone to trial and won against Meta in a verdict that was, I think, about $900 million early this year, and that's going on appeal. There's a consolidated class action from school districts across the nation, and then there's something like 20,000, 30,000 personal injury claims in arbitration and all that. So there's plenty of litigation to come. Ongoing right now, this is just step one. And I don't think that the, to jump to your next question, I don't think that the money itself is the important part. I mean, Reuters calculated that $18 billion is like three months of profit for Meta.