Aug 26 (Reuters) – Meta Platforms agreed to pay a maximum $16.68 billion as part of a settlement to resolve claims brought by states across the United States that the company designed Facebook and Instagram to addict children, misled consumers about their safety, and improperly collected personal data of children who used its platforms, court papers show.
Meta shares were down 0.4% in early trading.
COMMENTS:
CAROLINA ROSSINI, A PROFESSOR AT THE UNIVERSITY OF MASSACHUSETTS, AMHERST “The settlement amount is a beginning, not a resolution. Money compensates for past harm; it does nothing about the product that keeps causing it. Unless the settlement compels genuine redesign (e.g., removing the engagement mechanics built to exploit adolescent neurodevelopment, not cosmetic safety toggles) the harm continues the day the check clears. And redesign without accountability is a press release: we need independent audits, researcher access to platform data, and enforceable benchmarks with penalties for non-compliance. Meta has promised to change before. The question is who verifies it this time, and what happens when they don’t.”
DENNIS DICK, FOUNDER AND MARKET STRUCTURE ANALYST AT TRIPLE D TRADING INC”This was a big uncertainty weighing on shares of Meta. So they get the relief pop here. It’s an uncertainty for all social media companies. Does this give you a little bit of relief? I don’t know, because again, this isn’t like they were found not guilty. They settled. So I’m not sure what this means for other social media companies. I’m going to put this in the uncertain camp.”
CHRIS BEAUCHAMP, CHIEF MARKET ANALYST AT IG GROUP, LONDON”I think the market is viewing the settlement positively, as reflected in the pre-market share price rise. Investors seem relieved that the penalty was not as severe as it could have been, given the scale of the case and the potential for a much larger fine.”
“The settlement is more significant for what it says about the broader regulatory and reputational environment. There is growing scrutiny of social media’s impact, particularly among parents and younger users, and the required measures signal that regulators are taking a tougher stance.”
ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH IN FAIRFIELD
“This news of the settlement removes a major overhang. It doesn’t remove all the overhangs, but it removes the federal one. There are still a number of lawsuits and cases that are going to be against them, and they have to either settle them or get them resolved somehow. But I think the market is looking at it as a first hurdle that the company has at least cleared for now.”
“I think it was a surprise that it was settled… I didn’t think anybody really sort of expected it to happen, especially today.”
ART HOGAN, CHIEF MARKET STRATEGIST, B RILEY WEALTH, NEW YORK”This has the potential to be a groundbreaking social media destroyer, if in fact after the long legal process, it’s proven that Meta did something nefarious by designing their product to be addictive, especially to young kids. So I think it’s very early in the process and I don’t even know what the oddsmakers are making of that potential. But I would say when you take a larger look at what the potential for this could be — the companies involved would have to make massive changes to their algorithms and the way they do business. And it brings up the safety of social media at a time where a lot of people were thinking about the safety of artificial intelligence. So it’s something that sort of came from around the corner versus everyone being concerned about artificial intelligence and its safety.”
(Reporting by Jaspreet Singh, Ananad Gopal, Ragini Mathur, Sudeshna Ghoshal, Utkarsh Hathi in Bengaluru; Editing by Sweta Singh and Saumyadeb Chakrabarty)
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