Mark Lanier, a Texas lawyer who is also a part-time pastor, presented a jar of M&Ms to a Los Angeles jury, explaining that each candy symbolized a billion dollars of Meta’s market value, totaling about 1,400 M&Ms. The jury awarded his client six candies worth. The concern now in Silicon Valley is the potential for other jars to become empty.
On March 25, a California jury found Meta and Google liable in the first trial assessing whether social media platforms can be treated as defective products. The plaintiff, a 20-year-old woman known as K.G.M., testified that using YouTube from age six and Instagram from age nine worsened personal issues into body dysmorphia, depression, and suicidal thoughts. The jury deliberated for nine days, totaling 43 hours, and concurred with her.
The damages, while modest for big tech, were set at $3 million in compensatory damages and $3 million in punitive damages, split 70-30 between Meta and Google. Meta’s portion amounts to $4.2 million, minor compared to its $1.4 trillion market value at the time. However, the ruling’s significance lies in setting a legal precedent, with more than 10,000 individual cases and nearly 800 school district claims pending, along with eight more trials scheduled. The verdict establishes that a jury accepts the idea that social media apps can be inherently defective products.
The ruling came one day after another jury in Santa Fe, New Mexico, ordered Meta to pay $375 million in penalties for violating state consumer-protection laws by enabling child sexual exploitation. New Mexico became the first state to win such a trial against a social media company. Evidence included internal documents and testimony showing design features that enabled predators to target minors. Another bench trial against Meta is scheduled for May 4.
The consecutive verdicts triggered Meta’s biggest stock decline in over two years, falling 6.8% after the Los Angeles trial, continuing with an 8% drop, and ending the week down 11%. By month’s end, Meta was down 19%, losing roughly $310 billion in market value. Analysts from JPMorgan and Goldman Sachs adjusted their price targets, citing new litigation risks.
Within Meta, the verdict is seen more as a disappointment than a crisis. The company had argued Kaley’s struggles predated her Instagram use and warned against oversimplifying teen mental health issues. Meta plans to appeal and hasn’t suggested it will settle future lawsuits or change its product design.
Google contended that YouTube was misrepresented, claiming it is a streaming platform, not social media. The jury disagreed. Both companies will refine their legal strategies in future trials, with information from Kaley’s trial, including internal discussions about attracting young users, possibly being used again.
TikTok and Snap Inc settled before the trial, amounts undisclosed, with no liability admission. They still face several upcoming trials.
The broader implications transcend courtroom damages. Eric Goldman from Santa Clara University indicated that social media addiction lawsuits pose an existential threat to the industry’s business model. Social media might have to change their core offerings if broad relief isn’t achieved on appeal. Former Twitter executive Bruce Daisley noted that growth-driven engagement models could become problematic with new regulations or litigation.
The legal challenge comes amid strained relations between the tech industry and regulators. Australia’s social-media age ban initiated compliance actions for five platforms. The EU’s Digital Services Act and AI Act and the NIS2 Directive have brought new obligations, and the US Congress is considering federal age-verification and platform-liability laws.
Litigation differs from regulation as juries make definitive decisions, not compromises. The Los Angeles jury recently determined Meta and Google’s products were defective, harming a young woman. Although the $6 million penalty is trivial for such wealthy companies, the legal precedent holds considerable weight.
As Kaley’s attorney Jayne Conroy noted, significant calculations are underway in boardrooms at Meta, Google, Snap, and TikTok.