Meta’s settlement, TikTok’s Alabama deal, and cases against YouTube show states building new rules for how platforms operate and sell advertising.
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Last week, Meta suffered another major legal setback when a New Mexico jury found Facebook liable for more than 43 million violations of the state’s consumer protection law. It follows the company’s $18 billion settlement about teen social media addiction last month.
Two developments last week raised the possibility that Meta’s month-old settlement with state attorneys general could become a template for regulating other social platforms.
TikTok agreed to pay Alabama at least $100 million and accept protections for young users that parallel several of Meta’s restrictions. A day earlier, a New Mexico jury found Facebook liable for more than 43 million violations of the state’s consumer protection law.
Kevin Repine, vice president of data and analytics at Brkthru, thinks the Meta settlement gives states something they didn’t have before: a precedent they can take to other platforms.
“The Attorneys General now have that precedent of saying, ‘Yes, we were able to land this settlement … here’s YouTube and TikTok and all these other companies that we can now start bringing this to,’” he told MarTech. “I think it’s going to start pushing through.”
That prospect has implications beyond teen safety. If states begin imposing similar product restrictions on Meta, TikTok, and eventually YouTube, they could change the amount of youth ad inventory available, how personalized those platforms can be, and what advertisers pay to reach younger audiences.
Meta agreed to change more than its teen safety policies
The $18 billion Meta settlement announced in August resolves a lawsuit by 48 state attorneys general over harms to children and requires changes to Facebook and Instagram that go directly to how the products keep younger users engaged.
Among them are a two-hour daily limit across Facebook and Instagram for users under 18, a midnight-to-6 a.m. block, muted notifications during school hours, additional usage prompts, restrictions on some appearance filters, stronger age-assurance measures, and hidden like and reaction counts by default. Parents will also be able to make a non-personalized feed the default experience for their teens. Most of the requirements are set to remain in place for 10 years.
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Those changes don’t dismantle Meta’s advertising model. Meta already restricts advertisers from targeting teens based on interests and other signals available for adult audiences.
That makes the immediate advertising consequences easy to overstate.
Kevin Repine, vice president of data and analytics at digital media company Brkthru, expects the impact to depend heavily on how much time younger users spend on Facebook and Instagram once the controls take effect.
“If you’ve been over-relying on Meta or Instagram to reach that demographic, you’re going to have to pivot to find something different because the impression inventory is going to go down,” Repine told MarTech.
It remains to be seen if teens will substantially reduce their time on Meta’s platforms as a result of the settlement. Repine sees the immediate question as one to measure rather than predict.
“The big question, I’m sure a lot of people right now are thinking, is where are they going to move? Does this two-hour limitation actually materially change where they are, or are they all going to ask their parents, ‘I just want to stay on here,’ and that’s how it goes, and nothing really changes? They have to go somewhere.”
Repine said much of the impact will be “wait-and-see,” particularly whether the restrictions lead teens to migrate to other platforms or ultimately “not materially amount to anything.”
TikTok makes Meta’s unusual settlement provision more interesting
Meta’s settlement contains an unusual provision that makes some of the company’s payout dependent on competitors’ behavior.
Thirty percent of the settlement, about $5.3 billion, will be paid only if TikTok and YouTube adopt specified protections, including one-hour daily limits, nighttime restrictions, and age-assurance measures, and agree to matching financial payments.
Meta has called on both companies to adopt the framework.
TikTok hasn’t done that. Its Alabama settlement is a separate agreement with different terms. But the overlap is hard to miss.
TikTok agreed to a two-hour daily limit for underage users, restrictions on overnight usage and cosmetic filters, stronger parental controls and age verification, and an option for a non-personalized feed. Alabama is to get at least $100 million and could receive more depending on what happens in other states.
That doesn’t satisfy Meta’s condition as described in its settlement. It does show another state securing platform design changes from another major social network.
YouTube is now the platform to watch as legal pressure mounts. In March, it and Meta were the losing co-defendants in a California personal injury suit about teen use of the sites. It now faces class-action lawsuits at the state and federal levels. It also faces individual suits from the states of Arkansas and Nevada, and from a coalition of states’ attorneys general in federal court.
If requirements similar to Meta’s eventually apply to all three platforms, the implications for marketers will become more significant. Moving money from Instagram to TikTok or YouTube would do less to avoid restrictions on reaching younger audiences if the platforms operate under comparable rules.
Marketers disagree on how much advertising will change
Dion Bailey, CPTO and co-founder of Caliber, which brings journalism to social media, expects some impact on inventory and pricing if the rules reduce the amount of time younger audiences spend on social platforms.
“I think a couple of changes that come to mind are the amount of inventory that is going to be available, the cost of inventory as well, especially if they’re targeting the younger audiences,” Bailey said. “Then there is where they choose to spend those dollars as well. So again, you’d have some that would overly rely on these social platforms as the way. I think you’re going to have to spread your bets a bit more, quite frankly.”
Ben Moore, U.S. managing director of social media platform BeReal, is much more skeptical about an immediate advertising effect.
“I don’t see an immediate impact on the advertising business for Meta,” Moore told MarTech. “It’s not like a P&G or one of the biggest advertisers out there is going to pull out their Meta budget to put it somewhere else.”
Moore also doubts teen time limits will substantially reduce Meta’s inventory, arguing that the affected audience represents a relatively small portion of Meta’s users and that some teenagers will find ways around the restrictions.
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There’s even more uncertainty around personalization.
Repine points out that teen targeting was already constrained. Advertisers couldn’t use the same interest targeting, custom audiences, and other options available for adult users. A non-personalized content feed therefore doesn’t automatically translate into non-targeted advertising.
How many families choose that feed will matter, too.
Those distinctions make predictions about CPMs, reach, or campaign performance premature. The settlement changes the conditions under which Meta can engage younger users, but marketers don’t yet have enough behavioral data to know how much those changes will alter advertising performance.
The bigger change may be who writes the rules
The New Mexico verdict adds another dimension to the state pressure on Meta.
The case centered on allegations that Facebook deceived users about its privacy protections, including how it handled data that ultimately reached Cambridge Analytica. Jurors found more than 43 million violations of New Mexico’s Unfair Practices Act. The state is seeking up to $5,000 per violation.
It follows other state litigation over social media’s treatment of children. New Mexico previously won a separate judgment against Meta over child safety, which Meta is appealing.
Advertisers have shown little appetite for leaving Meta solely because the company faces legal or reputational problems. The 2020 Facebook advertising boycott attracted more than 1,000 companies and nonprofits, but did not fundamentally disrupt Facebook’s advertising business.
The current wave of cases poses a different kind of risk to the advertising model because states are seeking changes to the products themselves.
Time limits determine how much attention is available. Recommendation systems determine what users see. Age-assurance systems determine which rules apply to which accounts. Personalization controls can affect the signals platforms use to shape experiences.
For now, the effects are concentrated on younger users, and the advertising consequences remain uncertain.
But TikTok’s Alabama agreement makes it harder to dismiss Meta’s settlement as a one-company solution to a one-company legal problem. States are pursuing similar concerns across platforms, while Meta itself has a multibillion-dollar financial interest tied to competitors adopting comparable restrictions.
The question now is whether those separate cases will begin to produce a common set of rules for social media. Without federal legislation establishing one, state attorneys general and courts may begin building one, settlement by settlement.
MarTech is owned by Semrush. We remain committed to providing high-quality coverage of marketing topics. Unless otherwise noted, this page’s content was written by either an employee or a paid contractor of Semrush Inc.
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