No Mercy / No Malice: Little Tobacco Moment

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Scott Galloway (1:27)

I'm Scott Galloway and this is No Mercy, No Malice. Metta's $17 billion social media addiction settlement is being called a big tobacco moment. It isn't. It's another Metta win.

Little Tobacco Moment, as read by George Hahn.

George Hahn (1:55)

We've been played. Again. Last week, 47 states and the District of Columbia settled with Metta, resolving claims that the company had designed addictive algorithms targeting minors, violated youth privacy, and endangered children. The company didn't admit to any wrongdoing, but it agreed to pay up to $17.1 billion in penalties and make changes to its products. Texas settled separately on the same day for $1 billion and similar terms. The markets shrugged off the settlements, however, with Metta's shares rising 1% on the news. For those keeping score at home, a 1% increase in market cap on a $1.4 trillion company means the settlements, breaking the fever of uncertainty, paid for themselves.

I often call Metta the big tobacco of the attention economy. Tobacco destroys individual lungs and pollutes the immediate airspace. Metta's cancer metastasizes across our entire society. The conventional wisdom says this settlement is Metta's big tobacco moment. Finally, justice. Bullshit. This is the Metta knife, thrust a foot deep into the West's corpus, pulled out a centimeter.

Let's start on a positive note. A bipartisan group of state attorneys general took action against a harmful organization run by amoral people. Disgusted by the company's scant regard for child safety, but evidencing some measure of self-awareness, one Metta employee acidly noted, Targeting 11-year-olds feels like tobacco companies a couple decades ago.

Others likened their products to drugs and themselves to drug dealers. It's great that state AGs acted, but that it fell to them shows just how feckless Washington is.

The settlement calls for changes to Metta products, though Metta began introducing some of those changes last year, and simply agreed to follow its own roadmap. The changes include limiting teens to two hours of scrolling per day, unless their parents say otherwise, barring usage between midnight and 6 a.m., and turning off notifications during school hours. That's telling your kids they can only light up after class and not between midnight and 6 a.m. Teens can also turn off autoplay and switch their settings from the 4U style algorithmic feed to a chronological one. Metta promised to disable counting on the like button and ban extreme makeup filters, which will supposedly throttle back teen anxiety, depression and body image issues. Metta said it would strengthen protections against unwanted contact from strangers. A weird thing to have ever opposed as the absence of such safeguards was a gift to child predators. Lastly, Metta promised to invest in age verification, though responsible corporate citizens already do this.

What the settlement doesn't do is change Metta's design priorities. As my friend and colleague Jonathan Height, an NYU social psychologist noted, the settlement leaves many of the most harmful features untouched, including the algorithm. Metta's AI-powered recommendation engine is still running, engineered to maximize young people's engagement, even with content that harms them.

The ugliest part of the settlement? It makes Metta stronger. First, the company can weaponize compliance, digging a moat against new entrants. Second, by conditioning additional safeguards and $5 billion of the fine on YouTube and TikTok agreeing to similar terms, Metta has turned its competitors into corporate shields. Maison Zuckerberg even launched an ad campaign to pressure YouTube and TikTok and position itself as the leader on child safety. If laddering is highlighting your brand's strengths while depositioning a competitor and illuminating their weaknesses, the way I use the term in my brand strategy course at Stern, Metta's settlement is a roundhouse kick, knocking the feet out from under its rivals. Fun fact, Don Draper deployed laddering to weaponize government regulation to Lucky Strike's advantage in the pilot episode of Mad Men.