00:00On Tuesday, a landmark federal trial will begin, led by four states who accuse meta platforms of deliberately hooking children
00:07on its apps.
00:08You've heard about this before for financial gain, of course.
00:11There have been a lot of lawsuits and some wins and some losses.
00:1429 states, though, in total are suing the social media company, with potential penalties reaching nearly $200 billion.
00:21Joining us right now, Bloomberg News tech reporter Alexandra Levine.
00:26Alexandra, lay it out for us, what we're expecting.
00:29We're expecting, what, opening statements this week.
00:32We know that a jury has been chosen.
00:34But tell us what we are expecting when this gets underway.
00:38Yeah, oral arguments are beginning Tuesday.
00:41As you mentioned, it's this bipartisan coalition of 29 state attorneys general in this federal lawsuit where they've basically accused
00:48meta of designing its products,
00:50its most popular products like Instagram, Facebook, to be addicting to minors.
00:54We can expect to see Mark Zuckerberg and head of Instagram, Adam Osseri, potentially testify.
01:01But I think it's really important to think about this next trial in the context of a much broader moment
01:07for these companies.
01:08We've been hearing for years, as you pointed out, about potential harms to minors that many of the top platforms,
01:14not just meta, have caused.
01:15And this trial is just really one piece of a much bigger picture that many see as a real reckoning
01:21for these enormously powerful companies in the middle of an entire year of national social media litigation.
01:27Alexandria, the language in the lawsuit is pretty heavy.
01:30Accusing Facebook of harnessing powerful and unprecedented technologies to entice, engage, and ultimately ensnare youth and teens.
01:39What are we talking about here?
01:40Is that the algorithm?
01:42Well, meta would argue that all of these claims are overblown and repeatedly, including in some of the recent trials
01:49that we've seen this year,
01:50they've pointed to all sorts of protections that they believe they have in place that they believe keep teens safe.
01:56But I think at question here is really the product design.
02:01So it's notifications that are pinging young people overnight in the middle of the night while they're supposed to be
02:07sleeping.
02:07It is the algorithm that keeps them, you know, doing an infinite scroll.
02:12It is all design decisions that really, not just in the state AG's case, but in all of the litigation
02:20that we've seen playing out this year, that has been the primary focus.
02:23Whereas in the past, and as I said, we've been hearing about these harms to minors for many years now.
02:28In the past, the focus has more been on the content posted on the platforms.
02:33Today, the focus is primarily on the design of the platforms and how that could potentially harm young people.
02:38Well, and this is what we talk about, right, that this case threatens Metta's profits.
02:42They already have had to do a settlement, and they recently talked about, on earnings, about a $2 billion payout
02:49that was going to materially impact this company.
02:53How problematic financially and from a business case could this all turn out to be?
03:00Well, the potential price tag on this trial has captured a lot of attention.
03:04I think there has been some sticker shock here.
03:06So Metta has warned that the damages could be as high as $1.4 trillion.
03:10That is a remarkable number when you think about the fact that Metta has a $1.5 trillion market value,
03:17while attorneys from the states say that it would actually be closer to $200 billion that they're asking for.
03:23But just to put that in context, $200 billion is roughly equal to Metta's 2025 revenue.
03:28So either way, the sums are enormous, and I think as much as a financial penalty of that magnitude, whether
03:36it's $1.4 trillion or $200 billion, would certainly sting for Metta.
03:40I think what is a larger risk for the company in this situation is that the state AGs are actually
03:46also asking for injunctive relief.
03:49So this would basically force Metta to make changes to its DNA, the way that its products operate.
03:56This would fundamentally change how the business runs.
03:58And those risks, in some ways, are potentially even more threatening for Metta than just the financial award alone.
04:06This is going to be a seven-week slog, unless you can tell us otherwise, Alexandra.
04:11Mark Zuckerberg has not been called to testify.
04:14Will he be?
04:16He may testify.
04:18I think that, you know, who's testifying and exactly when remains to be seen.
04:22We have seen him, you know, go before Congress before.
04:25We've seen him in previous trials before.
04:28But I think what is so interesting about Mark Zuckerberg in this moment is that he has been, especially, and
04:34the timing is quite remarkable, especially in the last couple of weeks, he has been out in front of the
04:38company talking about its sweeping vision for the future of artificial intelligence.
04:42That's right, yeah.
04:43And superintelligence.
04:46And this is all talking so much about Metta's future.
04:50But this problem of potential harms to children is something that he has tried, you know, in some cases to
04:58avoid speaking about.
05:00And I think that there's very much a tension between what he's envisioning and talking about for the company's future
05:06versus his past and present.
05:07And I even think it's telling on earnings calls recently.
05:10You know, we've listened in on company earnings for both of the quarters of this year so far.
05:15And questions about this have not really come up that much.
05:18The executives who have spoken on the calls have really not addressed it.
05:22And that's not specific to Metta.
05:23That is across the board for most of the social media platforms that were involved in this national litigation that
05:28we've covered.
05:28So I think it'll be interesting to see if he testifies.
05:32But I think it's important to note that it's sort of in this broader context where it's just not an
05:36issue that he's talking about as publicly.
05:39And I think that a lot of the AI talk is overshadowing that or, you know, looming larger over that
05:47in some ways.
05:47Alex, one thing I want to ask you.
05:49There could have been, in the reporting that we've done here at Bloomberg, there could have been even more at
05:53stake for Metta.
05:53The court has already narrowed the state's case, throwing out claims based on some features critical to the company's business
05:59operations, including recommendation algorithms and notifications.
06:03I hear algorithms, and it kind of gets my attention.
06:06This could have been much worse.
06:07I mean, is there anything that's going to be done that substantially changes the access of content to teenagers and
06:17younger folks?
06:18Well, again, the main focus of this, it's less on the content itself and more on the design, right?
06:25So any injunctive relief measures that could go beyond the financial penalty would be more focused on sort of like
06:33changes to the way that the app operates, the way it delivers the content, but not to the actual content
06:39itself.
06:40But I think that the reason why that is such a threat is because if the courts of law order
06:45that injunctive relief measures like changing push notifications, changing the way the algorithm operates, if those are ordered as –
06:54if the courts of law order those kinds of changes, they have the ability to enforce those kinds of changes
07:01much faster than Congress can legislate.
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