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[00:00:36] Marcus Johnson: Hey, gang. It's Friday, September 4th. Marisa, Beth, and listeners, [00:00:40] welcome to Behind The Numbers: an EMARKETER Podcast made possible by Verve. I'm Marcus, and joining me for today's conversation we have, living in New York just for a little longer, newsletter analyst, Marisa Jones.

[00:00:50] Marisa Jones: Hi, Marcus. Thank you for having me.

[00:00:51] Marcus Johnson: Of course. Thank you for being here. Living in Pennsylvania, senior health analyst, Beth Snider Bulik.

[00:00:57] Beth Snyder Bulik: Hey, Marcus.

[00:00:58] Marcus Johnson: Hello. Today's fact-[00:01:00]

[00:01:03] Marcus Johnson: Okay. X-rays were discovered by accident, like everything. Everything was by accident. Yeah. The microwave, that was, uh, Percy Spencer, 1945, stood next to something, um, a magnetron tube, and the [00:01:20] chocolate bar in his pocket melted, and he was like, "Oh, there's something to this." Dr. Spencer Silver, a chemist at 3M, was trying to make a super strong adhesive, and he ended up making the Post-it Note.

[00:01:30] Beth Snyder Bulik: But it's not that sticky.

[00:01:31] Marcus Johnson: Yeah,

[00:01:33] Beth Snyder Bulik: exactly. He, he failed, right? Yeah.

[00:01:36] Marcus Johnson: He discovered

[00:01:36] Beth Snyder Bulik: the- The super adhesive failed Post-it Note.

[00:01:38] Marcus Johnson: Yeah, but did [00:01:40] well, um, by messing up. Um, Alexander Fleming, penicillin, um, the first antibiotic, 1928. He- that was by accident. He went away, came back, whatever. X-rays, same thing. 1895, German scientist Wilhelm Ront- Roentgen, I think is how you pronounce it, 1895.

[00:01:59] Marcus Johnson: He's [00:02:00] from Prussia, um, now Germany. Uh, wrapped a vacuum tube in thick black cardboard to block out all light whilst running electricity through it. He noticed a chemical screen across the dark room began to glow, proving the tube was emitting an invisible type of ray. When he placed his hand in front of the tube, the rays passed through his skin but were blocked by his bones, [00:02:20] projecting his skeletal outline onto the glowing screen.

[00:02:23] Marcus Johnson: 'Cause he didn't know what these mysterious rays were, he named them after the mathematical symbol for an unknown variable, X. Mm. Hence, X-rays.

[00:02:33] Beth Snyder Bulik: Interesting. Very interesting. Can't have been very health- also not very healthy for him, though.

[00:02:36] Marcus Johnson: No. What

[00:02:38] Beth Snyder Bulik: happened

[00:02:39] Marcus Johnson: to that poor guy, right? He didn't do this too [00:02:40] much.

[00:02:41] Marcus Johnson: Oh, we've invented nothing on purpose- ... but I'm glad of it. They help.

[00:02:46] Beth Snyder Bulik: Absolutely.

[00:02:46] Marcus Johnson: Today's real topic, a landmark case that might have just changed social media.

[00:02:56] Marcus Johnson: Okay. Meta settles for $18 billion in [00:03:00] lawsuit brought by 29 states over social media harms to children, writes Amanda Silberman of TechCrunch. She explains that the suit, the lawsuit alleged the social media giant knowingly designed platforms like Instagram and Facebook to addict kids despite knowing about the harms the platforms could pose to young users.

[00:03:17] Marcus Johnson: States also claimed Meta knowingly collected data from [00:03:20] children without parental knowledge, violating the Children's Online Privacy Protection Act, COPPA Blake Montgomery and Dara Kerr of The Guardian note that as part of the settlement, Meta has agreed to establish safeguards for teenage users, including daily usage limits and blocks on nighttime use nationwide in the US.

[00:03:36] Marcus Johnson: Lots of others will talk about them. Let's start with takeaways. Marisa, start [00:03:40] with you. It's been reported as 17.1, some people say 18. It depends. Yeah. But basically 17, $18 billion settlement news. What was your biggest takeaway?

[00:03:51] Marisa Jones: My biggest takeaway is that this is kind of just foreshadowing what's to come for other platforms, which we'll get into me thinking that maybe this is not as [00:04:00] big as a lot of people are making it out to be.

[00:04:01] Marisa Jones: Oh. But regardless, even if it's not huge for Meta, it is definitely a big turning point for, I think, social media more broadly. Because if a company as big as Meta can be pushed to fundamentally change some of their features to protect young users, [00:04:20] then to me that raises the risk for really any other platform to be pushed to reshape their products.

[00:04:25] Marisa Jones: Uh, we're seeing that, you know, TikTok, Snap, and YouTube specifically are still in the crossfire of this whole social media and how it affects young children debate and legislation going on. So I do think we are probably gonna see changes come [00:04:40] from them. I think we're gonna see changes come from smaller platforms, big or small, but my takeaway is that this is kind of a turning point and more is to come.

[00:04:48] Marcus Johnson: To break that down, re- referencing the other social media platforms, the $18 billion settlement, it gets distri- distributed to states over a 10-year period, but 5 billion of it is only paid out if Snap, YouTube, and TikTok- Mm-hmm ... [00:05:00] also settle with the states and agree to financial penalties and product changes, like a one-hour daily time limit, night mode, age assurance measures.

[00:05:08] Marcus Johnson: So you think that they will make these changes?

[00:05:11] Marisa Jones: I think at some point they're going to really have to if they want to put this to bed. I don't know how extreme the changes will be. I don't know if there's gonna be [00:05:20] some compromise to make them maybe not as extreme as states are hoping they will be, but I do think at least some small changes are going to ne- be needed to settle this debate.

[00:05:31] Marcus Johnson: My biggest takeaway was Meta knew that this was a battle they couldn't win, which is why they, they settled. Nora Freeman Engstrom, a law professor at Stanford University, was saying, "Meta wouldn't [00:05:40] settle unless it sees the writing on the wall and feels really exposed." So surprising that they, they settled, but in one respect, but in the other respect, and maybe not so much if they knew what was to come.

[00:05:50] Marcus Johnson: Some m- people, Marisa, are kind of hailing this as, uh, a huge win against social media companies. Brian Schwalb, uh, [00:06:00] the attorney general of the District of Columbia saying, "This is a monumental public health victory for young people, and the safety features Meta is required to install will fundamentally and immediately change how young folks use Instagram and Facebook."

[00:06:10] Marcus Johnson: California Attorney General Rob Bonta said, "We have secured a settlement with Meta that will make social media less dangerous for our kids and make a world of difference for our children [00:06:20] and their families, with Meta agreeing to make massive transformations that-" will reduce the risk of harm from its platforms.

[00:06:26] Marcus Johnson: And finally, Nathan Bomey of Axios writing, "This is social media's version of the landmark 1990s tobacco settlement that effectively reshapes the industry and the way young Americans experience some of their favorite platforms." Marisa, I'll start with you. Is this actually a [00:06:40] landmark ruling in your opinion?

[00:06:41] Marisa Jones: I'm kind of in two minds about it. I do think it's a big turning point. Like I said, if a company like Meta can feel like it's a big enough deal to settle for billions of dollars, that does say something. But when we're talking about kind of a world of difference in how teens interact with these apps, I don't see that in [00:07:00] the changes that Meta is committing to make to its apps.

[00:07:03] Marisa Jones: I don't think they're as strict as a lot of people are making them out to be.

[00:07:08] Marcus Johnson: Beth, let's quickly explain to folks what these changes are that Meta has to make. So, uh, a couple of them here. Number one, a default two-hour daily time limit across Facebook and Instagram, including usage [00:07:20] prompts every 15 minutes.

[00:07:21] Marcus Johnson: A night mode default block from Meta's apps between midnight and 6:00 AM. A school mode, muted notifications from 8:00 AM to 3:00 PM when teens should be in school. Teens, uh, are blocked from seeing likes or reactions on, uh, all posts. Teens will be blocked from beauty filters. More investment in age verification to make sure they're the [00:07:40] 13 years that you have to be, uh, to sign up.

[00:07:43] Marcus Johnson: Uh, the ability to turn off autoplay, stronger protections against unwanted contact from strangers, and, uh, the ability to have a chronological feed, not an algorithmic one. Um, as I mentioned before, Mr. Schwab, who's the Attorney General of District of Columbia, um, says this is a monumental public health victory for young people.

[00:07:57] Marcus Johnson: What do you think?

[00:07:58] Beth Snyder Bulik: I don't know about monumental, and he [00:08:00] obviously has a dog in the fight, so to speak. Mm-hmm. Right? It was his settlement- Yep. Yep ... so of course he's gonna declare victory. But I would say what's important to note, one of the things that is important to note health-wise, is that they're not random safety features, right?

[00:08:10] Beth Snyder Bulik: They line up, some of the changes and steps that they're gonna have to do line up with research that either shows or that recommends social medias take, take these steps to reduce- Compulsive use and to, um, [00:08:20] protect teens' mental health. Some of the problem, though, is it, it stops short of removing some of the most engaging features, like you mentioned, the infinite scroll, and the non-personalized feeder options instead of default.

[00:08:30] Beth Snyder Bulik: So there's some meaningful changes. There's the two-hour limits. I think one of the biggest things is, and Marisa already mentioned this, is that it's forcing Meta to change how Facebook and Instagram [00:08:40] respond to these mental health risks, right? So that the stronger age checks is gonna make it harder for teens to bypass protections.

[00:08:45] Beth Snyder Bulik: The time limits, the nighttime blocks, the comparison features, some of those tighter controls should address some of the- so some of the ways, the specific ways that social media makes teen mental health worse. So before, Meta had these features and said, "Yeah, we're doing this," but [00:09:00] now it's enforceable. So as part of this, there's gonna be independent checks to make sure that they're doing it.

[00:09:05] Marisa Jones: What I thought was kind of just interesting about what they're committing to change, there was two things that really stood out to me. One, teens can s- still spend up to two hours on Meta platforms. Um, that's well above the amount of time that we forecast they're- Mm-hmm ... spending on either Instagram or [00:09:20] Facebook-

[00:09:20] Marcus Johnson: Good point

[00:09:20] Marisa Jones: on a daily period for ages 12 to 17. Um, we forecast, I believe, on each platform they're spending less than an hour typically, so that's well above what they're already most- spending most of the time. I also think the option to give the teen the option to turn off a personalized feed is kind of a meaningless [00:09:40] change because I don't think they're going to because they have the option.

[00:09:44] Marisa Jones: It's not in the parents' control. Uh, so I think that was another thing that kind of made me raise an eyebrow, uh, over whether this is as big as people are making it out to be.

[00:09:54] Beth Snyder Bulik: It's interesting that you mentioned about the tobacco settlement or one of the attorney generals mentioned about the tobacco settlement.

[00:09:59] Beth Snyder Bulik: That was $250 [00:10:00] billion in the '90s. Much, much more money. I mean, there's a difference here, of course. Smoking has been connected to poor health, lung cancers, emphysema, that sort of thing. And on the health side, social media is blamed for some of these te- some of the teen mental health crisis, but there's a bigger problem there.

[00:10:18] Beth Snyder Bulik: So the d- it's [00:10:20] not a direct comparison, but I do think that one of the things that it did was bring this kind of public health requirement that can force companies to change their platforms, change their marketing in the case of tobacco companies, but in, in Meta's case, change their platforms in the service of public health.

[00:10:36] Marcus Johnson: Mm-hmm.

[00:10:36] Beth Snyder Bulik: In this case, teen mental health.

[00:10:38] Marcus Johnson: It's a really good point. It's an [00:10:40] historic ruling in some respects, but perhaps not others. Mr. Bomey of Axios was saying that, um, or pointing out that the $17 billion that Meta settled for, uh, is on par with historic federal civil settlements like the Volkswagen Dieselgate scandal and the BP Deepwater Horizon deal.

[00:10:55] Marcus Johnson: But to your exact point, Beth, um, a small fraction of the '98 tobacco [00:11:00] deal. The States, States collected over $200 billion. But that said, the tobacco deal, people are comparing it to that. It, it might be an unfair comp because Indiana Attorney General Todd Rokita was, um, noting this isn't just about money, it's about changing how these platforms operate so they stop exploiting the developing brains of our kids.

[00:11:18] Marcus Johnson: So it wasn't about sec- [00:11:20] I mean, they were suing for close to 200 billion, but it wasn't about that exclusively. Arguably, it was more about making systemic changes to the platform. Rissa, you were talking about, I mean, talking about systemic changes, you were talking about changes to other social platforms following because of this.

[00:11:35] Marcus Johnson: One of the takeaways I had was are these changes coming for all [00:11:40] users? Not just young ones. How long is it until we start to see usage limits, l- likes going away, beauty f- filters going away for not just young people, but maybe older folks as well who use the service? Cecilia Kang and Eli Tan of New York Times pointing out that countries around the world are limiting social media use by young people.

[00:11:59] Marcus Johnson: Last year, [00:12:00] Australia became the first nation to bar children under 16 from using social media. Other countries and the EU bloc have implemented or are considering similar rules. In the US, lawmakers have reintroduced the Kids Online Safety Act. And Jon Rohich of NPR was writing that Meta's case is part of a wave of lawsuits that is being compared to litigation against the [00:12:20] tobacco companies, as we mentioned, in the 1990s.

[00:12:22] Marcus Johnson: Those suits led to record settlements, changes to the way the companies operate, and a shift in the public discourse about cigarettes. Um, Marisa, I'll start with you for this one. Does this ban make a teen social media ban more or less likely?

[00:12:34] Marisa Jones: In my opinion, it makes it a bit more likely that we're going to see stricter features [00:12:40] and stricter rules and restrictions on these platforms, but I don't know that it's a meaningful enough step toward an outright ban.

[00:12:48] Marisa Jones: I do think there's the caveat that countries who have bans, like Australia, I believe data shows a majority of Australian teens are bypassing these bans. They're not strict. They're still on social [00:13:00] media. Mm. Um, so I think there's some concern and speculation that outright bans maybe aren't the most effective way to protect teens' mental health on social media platforms.

[00:13:10] Marisa Jones: Mm-hmm. Mm-hmm. I think this will instead indicate that some other platforms are going to, one, face similar rules, like I mentioned before, but rather [00:13:20] than outright countrywide ban, I think we'll see more individual states and jurisdictions, um, imposing stricter rules on teen social media usage, or more broadly, platforms being required to eliminate features like endless scrolling, to eliminate things like beauty filters, to put time limits on teen social media use.

[00:13:38] Marisa Jones: And we do see strong [00:13:40] backing and support for Stricter regulations of how children are on social media. Um, CivicScience found 74% of US adults support federal rules to prevent the collection of personal data of children. 61% support widespread age verification. But those are smaller measures rather than an outright ban.

[00:13:59] Marisa Jones: Mm-hmm. Mm-hmm. So I think [00:14:00] those kind of small changes is more likely what we're going to be seeing.

[00:14:03] Marcus Johnson: Beth, does this make a ban more or less likely for, for kids on social?

[00:14:07] Beth Snyder Bulik: I mean, I think less likely, right? So they, that's part of the reason why they settled, so that they could- Mm ... that didn't have more stringent or strident, um, requirements.

[00:14:15] Beth Snyder Bulik: I think, though, like Marisa said, it means something for all of the other social media companies, right? [00:14:20] So is this maybe a new baseline for what, uh, the others, 'cause they're all facing lawsuits as well, what they're going to be asked for? But it, it does seem to, as I mentioned before, it, it's requiring the changes in the platform, not just, you know, you have to protect, um, teens, but here's what you have to do, and here's the, and we will be checking in on you to make sure that you're making those changes.

[00:14:39] Marcus Johnson: Mm-hmm, mm-hmm. [00:14:40] Beth, what do we know about social media's role in youth mental health, and what could change as a result of this settlement?

[00:14:47] Beth Snyder Bulik: Teen mental health was already a crisis in the US, um, before social media. The pandemic made it worse, but even before that, over- overall teen mental health had been getting worse.

[00:14:56] Beth Snyder Bulik: According to the CDC, by 2021, [00:15:00] persistent hopelessness among teens reached 42%. And it's gone down a little bit, but even the latest data shows 40% of high school students say they experience persistent sadness or hopelessness, and 20% say they have seriously considered committing suicide.

[00:15:14] Marcus Johnson: 20%.

[00:15:15] Beth Snyder Bulik: That's high, right?

[00:15:17] Beth Snyder Bulik: And that's recent. Part of it is all of the, the teen mental health [00:15:20] crisis and the pandemic has all happened as social media has started to play a much more dominant force in teens' lives, right? While social media didn't cause this ongoing crisis, there's research that I talked about a little earlier that show some of the behaviors, overuse, consuming harmful content, cyberbullying, disrupted sleep, all of those things end up in worse [00:15:40] outcomes for teen mental health.

[00:15:41] Beth Snyder Bulik: There's also some research that shows adolescents who spend more than three hours a day on social media have twice the risk for depression and anxiety. On the flip side, though, we can't forget this. There's a positive side of social media, right? For teens, it provides connection, support for a lot of young people.

[00:15:54] Beth Snyder Bulik: That's where we lose the cigarette connection, right? There's no positives about smoking. But there are some positives [00:16:00] about social media. I think that that's, that will continue probably to be a mitigating factor in all of this, that there is that kind of positive side that will be argued as- That connection support that, that teens need, that helps their mental health, right?

[00:16:14] Beth Snyder Bulik: Mm-hmm. Yeah. Kids who are isolated are more likely to be depressed and anxious, so social media can help in making connections [00:16:20] in that way, I would say.

[00:16:20] Marcus Johnson: Mm-hmm.

[00:16:21] Beth Snyder Bulik: I'm not advocating for- ... kids to be using social media more than one hour a day, much less two, but-

[00:16:26] Marcus Johnson: I guess I'm wondering whether this feels like a tipping point or not.

[00:16:29] Marcus Johnson: We talked a bit about kind of, you know, being likened to the landmark ruling from the tobacco companies. But it's interesting, fr- from a financial standpoint, this is a huge win for Meta. Uh, [00:16:40] investors were bracing for a possibility of much larger payouts, about $1.4 trillion, uh, Marisa, we've, as we've spoken about- Mm-hmm

[00:16:46] Marcus Johnson: in the past, if the trial went to jury verdict. Uh, Meta's stock is 1.4 trillion, so the potential to wipe them out, the $18 billion penalty is about 1% of that. And Miss Engstrom, who I mentioned earlier from Stanford [00:17:00] University, pointed out that Meta made close to $18 billion in net profit last quarter, which is what they're expected to pay out over the next 10 years.

[00:17:07] Marcus Johnson: The four states that brought the suit against Meta had sought, as we mentioned, roughly 200 billion. That's a more significant figure. That's roughly what Meta made last year. On the one hand, it does seem like they, a, a huge win, [00:17:20] and investors appear thrilled by the outcome. The Economist was saying, "If this spells trouble or a catastrophe for Meta, nobody told its investors.

[00:17:27] Marcus Johnson: The share price barely moved in response to the news, in part because the risk already weighed heavily on the company's valuation," so this was already kind of baked in a bit. It also points to confidence that Meta will remain enormously profitable. Is this a [00:17:40] tipping point, Marisa, for, for Meta in, I don't know, one way or another?

[00:17:43] Marisa Jones: It's a minor tipping point, I think. I think it's going to kind of settle some concerns. Obviously, they're still facing more lawsuits over child safety on their platforms, that maybe this makes it more likely those lawsuits are successful and Meta has to settle with, for other sums [00:18:00] of money, settle by changing some of the features of their platform.

[00:18:05] Marisa Jones: But like I've said previously, I don't know that it's as big as a lot of people have made it out to be.

[00:18:09] Marcus Johnson: And Beth, in terms of the way people, the way public views social media, uh, and the conversation a- around suggested addictive, uh, qualities, do you see the court [00:18:20] of public opinion really taking a lot from this ruling a- and, and the tables kind of turning for Meta?

[00:18:25] Beth Snyder Bulik: I don't think, not significantly. Maybe somewhat, right? So because this summit targets some of those features that, um, that, you know, the disrupted sleep, the encouraging compulsiveness, it does tackle that to some extent, and that change then in protecting teens [00:18:40] becomes part of the platform design rather than just the parents' responsibility or even the users themselves.

[00:18:46] Marcus Johnson: Mm-hmm.

[00:18:46] Beth Snyder Bulik: I mean, whether that ends up in actually pr- improving teen mental health depends somewhat on how, how well the restrictions are enforced, um- Mm-hmm ... you know, sort of the independent follow-ups, whether other- Right ... other platforms- Follow, and if there are [00:19:00] future even more stricter enforcements, I think

[00:19:02] Marcus Johnson: Let's end with this.

[00:19:02] Marcus Johnson: The Economist, uh, writing Rob Bonta, California's attorney general, had described the case settlement as Meta's tobacco moment, likening the firm's alleged deceptions to those that led to huge payouts for cigarette makers in 1990s. If measured by dollars Meta has had to fork out, uh, it has proved a poor [00:19:20] analogy.

[00:19:20] Marcus Johnson: The super-sized settlement reached against big tobacco in '98 involved a monetary penalty larger than their combined market value at the time. In a different sense, The Economist writes, however, the analogy may turn out to be surprisingly apt. Even after these settlements, tobacco firms went on to turn huge profits.

[00:19:36] Marcus Johnson: Investors who, in 2000, purchased stock [00:19:40] in Altria, Altria, then Philip Morris, would by now have generated a 36-fold return- Wow ... uh, including dividends. Teens may soon be spending less time on Meta's platforms, but it is a long way from being humbled. Megan Babrowski of The Journal, uh, pointing out that Meta's still facing thousands of [00:20:00] lawsuits that have been filed by school districts and in- individual plaintiffs alleging social media harms.

[00:20:04] Marcus Johnson: Mr. Roach of NPR writing the case is one of thousands against social media companies, including Meta, for alleged harms to mental health of minors. And interestingly, experts say many of those cases will not be affected by this outcome. And that's all we've got time for for this episode. Thank you so much to my guests.

[00:20:19] Marcus Johnson: Thank you [00:20:20] to Marisa.

[00:20:20] Marisa Jones: Thank you for having me.

[00:20:21] Marcus Johnson: Thank you to Beth.

[00:20:22] Beth Snyder Bulik: Thanks for having me.

[00:20:23] Marcus Johnson: My fellow Paris lovers. Uh, thanks to the production crew, Lance, and to everyone for listening to Behind the Numbers: an EMARKETER Podcast, made possible by Verve. We'll be back on Tuesday discussing whether AI platforms will become your financial advisor instead of your bank.

[00:20:37] Marcus Johnson: Until then, happiest of long [00:20:40] Labor Day weekends.