Mark Zuckerberg wants to make sure his competitors share his pain

The $17.1 billion that Meta agreed Wednesday to pay 47 states, the District of Columbia and some U.S. territories to settle a three-year-old lawsuit likely won’t make much of a dent in Mark Zuckerberg, Meta’s CEO.

However, the details of the settlement could leave a mark. Meta also agreed to limit children’s access to its branded products, such as Instagram and Facebook, by creating daily time limits, increasing parental controls and restricting access during school hours.

That could permanently change the way Meta communicates with its youngest users, the next generation that swipes and clicks across apps, and make it harder for the company to stake its claim to be the world’s dominant social media company.

Mr. Zuckerberg has a contingency plan: Level the playing field so kids can’t just switch to a competitor’s app. If it is to play by the new rules, it wants companies like YouTube and TikTok to do the same. Meta built a financial incentive into its deal with the attorneys general to attract other companies.

Here’s how it would work: The Meta’s cash settlement baseline is $12 billion. The company also agreed to a two-hour daily time limit for children. Meta will cut it to one hour if YouTube and TikTok also agree to a one-hour limit. And if the other companies also pay $5 billion to the states, Meta will kick in the rest of the roughly $5 billion it promised.

It is not clear what mechanism would be needed to make such cooperation from other companies a reality. YouTube and TikTok have yet to publicly acknowledge Meta’s overtures. YouTube declined to comment, and representatives for TikTok did not respond to requests for comment.

On Wednesday, some lawmakers signaled their desire to see the rules apply to the rest of the industry. Senators Marsha Blackburn, Republican of Tennessee, and Richard Blumenthal, Democrat of Connecticut, said in a joint statement that Americans need safeguards that apply to “all social media companies — not just Instagram and Facebook.”

This wrinkle in the settlement shows how important it is for Mr. Zuckerberg to ensure that his competitors do not have an advantage over his company when it comes to attracting young users.

It also underscores Mr. Zuckerberg’s long-term struggle to ensure that Meta, which has climbed over the years from heavy investment in the so-called metaversion to artificial intelligence, remains relevant to consumers whose ad consumption pays the bills.

For more than two decades, Meta has maintained its dominant position by convincing generations of young people to download and become repeat users of its apps. In a digital world where technology companies rise and fall with the whims of consumer tastes, anything that might break that cycle is very dangerous.

In society blog post titled “An Open Letter to TikTok and YouTube to Join Us in Supporting Teens,” Meta urged other companies to follow similar restrictions. The company released the letter shortly after announcing its settlement on Wednesday morning.

Silicon Valley has largely succeeded in deflecting concerns about children’s safety by emphasizing controls that shift responsibility to parents. Mr. Zuckerberg and his peers have become accustomed to regular appearances on Capitol Hill. Despite more than a dozen congressional hearings, nothing much happened.

But in 2023, Meta was sued by more than three dozen states, accusing it of knowingly using features on Instagram and Facebook to attract children to its platforms, even though the company said its social media pages were safe for young people.

More lawsuits piled up. In March, Meta and YouTube lost their first personal injury case, resulting in $6 million in damages. This month, a New Mexico judge ordered Meta to pay fines totaling nearly $1 billion for violating consumer protection laws.

As YouTube and TikTok struck settlement deals, some Meta executives feared their critics were closing in, according to two people who spoke on condition of anonymity. Seven days until the final trial, Meta saw the writing on the wall: It’s time to settle down.

The financial terms of the Meta transaction could be considered a bargain. The current market cap of Meta is around $1.45 trillion. The company posted a profit of $15.85 billion in the most recent quarter. And they will spread their payments to the states over 10 years. Over time, these payments will likely be just a blip in Meta’s quarterly financial results.

“$17 billion sounds like a responsibility until you look at the numbers,” said Lisa Strohman, a clinical psychologist and founder of the Digital Citizen Academy, an organization dedicated to addressing technology addiction and overuse. “Even the maximum settlement represents only about 8.5 percent of annual revenue.”

But changes in applications can be a real problem. No more push notifications for kids during school hours, improved age verification tools, and a hard two-hour daily time limit for these apps all contribute to reduced engagement.

If enforced — and Meta has a history of not honoring its agreements with regulators — the changes could threaten Meta’s ability to attract new users while keeping competitors from having to follow the same rules.

Now Mr Zuckerberg says his company wants to take the lead in “setting a new industry standard” for children’s online safety.

Meta encouraged her colleagues to join the company and voluntarily live up to the standards expected of them. “These protections will only be truly effective if we work with our peers — TikTok and YouTube — to implement the same measures,” the company said in a statement. blog post.

On Thursday, Meta plans to run full-page ads in The Washington Post, The Los Angeles Times and The New York Times. The company said it wanted to “empower parents and support teens.”

Meta’s critics say the company cynically preys on public goodwill.

“This attempt to pose as the good guys is just another PR campaign by Meta,” said Sacha Haworth, founder and executive director of the Tech Oversight Project, a nonprofit watchdog organization.

Henry Coan, founder of advertising company Interrupt Studios, said in an interview that it reminded him of an episode of “Mad Men,” the hit TV series about an advertising firm set in the 1960s. When the agency lost its contract with Lucky Strike, the cigarette supplier and its biggest client, the main character wrote an open letter to The New York Times claiming that the firm had turned over a new leaf.

In the show, the title of the letter was straightforward: “Why I’m Quitting Tobacco.”

Cecilia Kang contributed reporting from Washington.