Meta’s Blockbuster Trial Draws Parallels To Big Tobacco

In early october a sequel to “The Social Network”, a film about Mark Zuckerberg’s founding of Facebook, is scheduled for release. Called “The Social Reckoning”, it will dramatise the role of whistle-blowers in the early 2020s who alleged that the social-media giant hid that its products were harmful. Those who cannot wait until then can follow a no less vivid drama involving Facebook, Instagram and their parent company, Meta, in a federal courtroom in Oakland, California. Oral arguments started on August 18th. Reckoning or not, the trial could be a blockbuster.

California, Colorado, Kentucky and New Jersey are leading a group of 29 states that are suing Meta over allegations that its platforms developed features to hook children, that it misled the public about the dangers and that it violated kids’ privacy. Rob Bonta, California’s attorney-general, has described it as Meta’s “tobacco moment”, likening the firm’s alleged deceptions to those that led to huge payouts by tobacco firms in the 1990s, and by opioid manufacturers and pharma firms this decade. In opening arguments, Megan O’Neill, a deputy attorney-general in California, said that Meta designed its platforms “so that children would keep coming back”.

Meta has consistently denied that its products are harmful. Its legal team describes the tobacco analogy as “wildly inappropriate”. It will make the case that far from being like cigarettes, Facebook and Instagram bring benefits to youngsters. It suggests the plaintiffs are grandstanding in order to turn the trial into a referendum on the impact of social media on children, when in fact the legal issues are narrow. It asks why it is being singled out, when youngsters’ use of YouTube, owned by Google, and TikTok, created by China’s ByteDance, is even higher than it is of Instagram.

A lot is at stake. The four states acting as plaintiffs initially calculated that penalties could reach $1.4trn if Meta loses the case, based on the number of teens in their combined population who use Instagram and Facebook for more than half an hour a day. The attorneys-general since appear to have lowered that number to almost $200bn—roughly equivalent to Meta’s entire revenue in 2025. If that were a benchmark used for the rest of the states, it would devastate the company.

Whether it comes to that is another matter, though. The suit makes strong claims. It argues that Meta, in order to bolster profits, used techniques to glue children and teens to its platforms, damaging their mental health. But unlike a trial in Los Angeles in March in which Meta and Google were obliged to pay damages to a 20-year-old harmed by spending much of her life on social media, the Oakland case is not focused on addiction.

Instead it is what one of the attorneys-general calls “the largest consumer-protection lawsuit in American history”. Vincent Joralemon, of the University of California’s Berkeley Centre for Law & Technology, says the big question is whether or not Meta “deceived the public” about the impact of its products. That is similar to the tobacco and opioid cases. It also means whistle-blower testimony is likely to be more relevant than thorny psychological debates about addiction, reckons Mr Joralemon.

Meta’s investors tend to think that the burden of proof on the deception charges is “quite high”, says Gil Luria of D.A. Davidson, an investment bank. Litigation risk has weighed on Meta’s valuation, going by the ratio of its share price to earnings, which is lower than those of its big-tech peers. But rather than fearing a giant payout, shareholders worry more about remedial changes that the prosecutors may seek if Meta loses in court, according to Mr Luria. Those include changes to features Meta, Google and TikTok use to keep user engagement high, such as “infinite scroll”, which continuously loads new posts. “If we didn’t have infinite scroll, we wouldn’t have as many ads,” Mr Luria says.

Even if Meta loses, it has scope for appeal. It could, for instance, do so on the grounds that it is protected by Section 230 of the Communications Act, which safeguards platforms from legal liability for content posted by third parties. It sought to use that argument to halt the Oakland trial before that concluded, but the judge ruled that the appeal was premature.

Public concern in America about the impact of social media on children is high, and being dragged through the courts may not help Meta’s image with parents. But there is also pushback. Efforts by some states to restrict young people’s social-media usage have run into opposition from free-speech advocates. In Australia, a law barring under-16s from holding social-media accounts has faced challenges, including from teens themselves.

Court verdicts can have less of an impact than the big headlines that accompany them suggest. After the tobacco industry agreed to shell out more than $200bn over 25 years in a 1998 settlement, it survived, partly by shifting sales internationally. Matthew Lawrence of the Emory University School of Law says such settlements had a “disappointing history” in America. “We can mitigate the harms of industries exploiting addiction, but we have not yet had great success in finding ways to eliminate the harms.”