Latest / THE DAILY BRIEF / Meta settles with states over social media harms

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Meta settles with states over social media harms · THE DAILY BRIEF

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  Speaker 1: All right.
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  Speaker 2: We are on top of major breaking news in the
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  Speaker 2: tech world. Meta, the parent company of Facebook. has reached
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  Speaker 2: a settlement in a huge lawsuit filed by more than
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  Speaker 2: two dozen states. The states accused the company of misleading
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  Speaker 2: customers about the safety of its products, intentionally getting children
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  Speaker 2: addicted to them and improperly collecting their data.
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  Speaker 1: We are still reading through the court.
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  Speaker 2: Documents, but it looks like the penalty could max out
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  Speaker 2: at more than $ 16 billion. The trial was in its
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  Speaker 2: second week in California. If the company lost... Meta could
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  Speaker 2: have faced hundreds and hundreds of billions of dollars in damages.
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  Speaker 2: Joining me now, Neil Irwin, chief economic correspondent at Axios
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  Speaker 2: and Jeffrey Sonnenfeld.
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  Speaker 1: I'm so glad he's here.
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  Speaker 2: Senior associate dean for leadership studies at Yale School of Management. Jeffrey,
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  Speaker 2: I get that on its face, people are going to
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  Speaker 2: be like, wow, it could be 16 billion dollars. Sixteen
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  Speaker 2: billion dollars is not much. We thought it was going
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  Speaker 2: to be hundreds of billions.
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  Speaker 1: What do you think?
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  Speaker 3: It's unbelievable.
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  Speaker 4: This was, uh, you know, a $ 1. 4 trillion lawsuit that
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  Speaker 4: here you have 29 States, red States and blue States
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  Speaker 4: combined that, and it was being tried in Oakland, California
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  Speaker 4: by a very good attorney general, uh, who somehow.
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  Speaker 3: They've dropped the ball on this.
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  Speaker 4: Cause this was, this was a home court advantage for
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  Speaker 4: Rob Bonta, the attorney general, a Democrat. And of course,
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  Speaker 4: California blue state, there's a very favorable setting. Uh, and, uh,
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  Speaker 4: Everybody was anticipating there's going to be billions, tens of
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  Speaker 4: billions of dollars, not this. Mere $ 16 billion. It is
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  Speaker 4: a mere $ 16 billion. That's two weeks of revenues for just.
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  Speaker 1: Two weeks of revenues. That's what people need to understand. Like,
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  Speaker 1: because someone's going, $ 16 billion, that's peanuts for Meta.
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  Speaker 3: It's two weeks of revenues.
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  Speaker 1: And it sets an excellent precedent for them.
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  Speaker 2: Like, we thought this lawsuit was just the first, and
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  Speaker 2: there were going to be so many behind it.
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  Speaker 4: Oh, the victim stories were devastating. Francis Hagen, who was
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  Speaker 4: in my class various times, the whistleblower inside, of course,
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  Speaker 4: of Meta, had pointed out just the way they were
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  Speaker 4: trafficking in miners' data that they intentionally were using Instagram.
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  Speaker 3: To bait them young.
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  Speaker 4: And the record was so devastating that as Zuckerberg said this,
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  Speaker 4: he said, settle. I don't want this to go to trial.
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  Speaker 4: And they settled so low. They could have gotten so
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  Speaker 4: much better a deal out of them. And the cautionary
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  Speaker 4: tale for other social media is, hey, who cares?
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  Speaker 3: We can go right ahead. I mean, this was a law.
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  Speaker 4: This was an old law. It was a law from 2000.
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  Speaker 4: It wasn't one of these newer ones. It was John
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  Speaker 4: McCain's law. And Frank Lautenbach's law and a Nevada Democrat
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  Speaker 4: who's now no longer senator anymore named Brian, is that
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  Speaker 4: these three sponsored a very strong law, bipartisan law. And
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  Speaker 4: the violations, you know, I'm no attorney, but they seem
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  Speaker 4: pretty egregious in terms of entrapping kids, enticing them, entrapping
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  Speaker 4: them and trading in their data without their knowledge, underage kids.
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  Speaker 4: And the victim stories were so devastating that this was
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  Speaker 4: going to be a very difficult case for all of
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  Speaker 4: social media companies.
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  Speaker 3: And now, what's happening?
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  Speaker 4: You look at the markets right now, as we're speaking, Stephanie,
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  Speaker 4: MetaStock is up 6%.
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  Speaker 2: He took the words right out of my mouth, Neil.
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  Speaker 2: MetaStock is going to soar today. This is going to
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  Speaker 2: cost them nothing.
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  Speaker 5: Yeah, look, there are some agreements they made in this agreement, apparently,
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  Speaker 5: where a two-hour cap on teenagers being able to use Instagram.
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  Speaker 4: Sure.
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  Speaker 5: Limit on overnight. So there's some stuff in here that
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  Speaker 5: implies changing the way the company works and the way
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  Speaker 5: the products work going forward. But you're right. You know,
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  Speaker 5: we have this broad crisis of mental illness, depression, general
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  Speaker 5: kind of malaise and unhappiness, especially among younger people. And
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  Speaker 5: I think you can really draw a direct line from
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  Speaker 5: the social media that so many have consumed so much
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  Speaker 5: of the time and this broader kind of crisis of
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  Speaker 5: mental health. And, you know, the idea that 16, 17
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  Speaker 5: billion dollars and some limitations change that, it's not at
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  Speaker 5: all clear to me.
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  Speaker 2: So my message to Rob Bonta, I know we just
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  Speaker 2: had you on to talk about Paramount. If you'd like
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  Speaker 2: to come back on to talk about this, I got
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  Speaker 2: a lot of questions for you. All right.
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  Speaker 1: And other businesses.
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  Speaker 4: And he's a Yale alum, too, and we like him.
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  Speaker 3: What's going on?
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  Speaker 1: Uh-oh, Yale alum. OK, let's talk about other businesses.
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  Speaker 2: Canada is now punching back against President Trump's trade war,
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  Speaker 2: unleashing new retaliatory tariffs on hundreds of U.S. products from
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  Speaker 2: aluminum to lobster. The tariffs are ranging 15%. 50 percent. Like,
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  Speaker 2: do you hear how exasperated I sound? Because this is
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  Speaker 2: so ridiculous and pointless. You and I both know Mark
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  Speaker 2: Carney very well. This is crazy that this is even happening.
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  Speaker 1: So unnecessary. It's going to hurt both of our countries.
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  Speaker 3: Mark Carney is classy. Mark Carney is really dignified.
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  Speaker 4: And Mark Carney is probably going to become the most
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  Speaker 4: popular prime minister in Canada's history. Lester Pearson, before you
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  Speaker 4: were born, but when I was a child, was considered
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  Speaker 4: the most unifying prime minister of Canada. And Brian Mulroney,
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  Speaker 4: second to him, who created the free trade agreements. However,
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  Speaker 4: a third might have been Pierre Trudeau, the father. But
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  Speaker 4: now we have seen that Mark Carney has every part
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  Speaker 4: of Canada across political parties so unified.
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  Speaker 3: And a lot of this is the histrionics. You know,
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  Speaker 3: people have said that.
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  Speaker 4: You know, like Macron, President Macron has said nobody has
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  Speaker 4: unified Europe as much as President Trump has in a
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  Speaker 4: negative reaction since Charlemagne. And it's a similar thing here
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  Speaker 4: is that people who have major differences, political, cultural, ethnic
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  Speaker 4: and things, have all unified in Canada against the U.S.
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  Speaker 3: But in terms of the dollar issues, it's just so strange.
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  Speaker 3: This was.
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  Speaker 4: President Trump is saying, who is the idiot president that
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  Speaker 4: brought about this horrible, unfair deal?
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  Speaker 3: This is his deal.
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  Speaker 1: Correct.
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  Speaker 3: USMCA in 2020.
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  Speaker 2: Maybe the best thing Jared Kushner did in Trump's first
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  Speaker 2: term was USMCA.
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  Speaker 1: Neil, what is your take here?
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  Speaker 2: Because economically, it makes no sense. But politically, if I'm
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  Speaker 2: Mike Rogers in Michigan, if I'm Susan Collins in Maine
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  Speaker 2: right now, I'm saying, are you kidding me?
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  Speaker 5: Yeah, look, we've seen this over and over. The president
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  Speaker 5: does not seem very focused on helping Republicans win these
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  Speaker 5: tight congressional races and Senate races. And this is the
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  Speaker 5: latest example. Look, there are two asymmetries here. And the
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  Speaker 5: president seems to be focused on the economic asymmetry.
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  Speaker 1: The U.S.
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  Speaker 5: Economy is 10 times bigger than the Canadian economy. Therefore,
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  Speaker 5: they need us more than we need them. But he's
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  Speaker 5: forgetting the political asymmetry, which is he's not very popular
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  Speaker 5: right now. Mark Carney is very popular in Canada and
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  Speaker 5: the Canadian people are united. Doug Ford, the provincial leader, conservative.
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  Speaker 5: This is a bipartisan thing in Canada being really outraged
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  Speaker 5: at U.S.
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  Speaker 3: Behavior.
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  Speaker 5: And you're seeing that and just the resolve of the
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  Speaker 5: Canadian people to to deal with the pain of these
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  Speaker 5: higher tariffs in exchange for, you know, really, really standing
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  Speaker 5: up for themselves and their and their sense of nationhood.
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  Speaker 4: Can I add to those excellent insights just a why now?
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  Speaker 1: Excellent insights, yes.
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  Speaker 3: They are very good.
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  Speaker 1: They are.
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  Speaker 3: Is that why now?
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  Speaker 4: It's because USMCA came up. The original terms expired. It
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  Speaker 4: was up for negotiation in the beginning of July. Well,
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  Speaker 4: the negotiations failed, but they could have just rolled over
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  Speaker 4: with the same terms. Trump created this non-issue. Trump has
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  Speaker 4: completely manufactured this. There's no reason to go into Iran
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  Speaker 4: just then. There's no reason to go into Venezuela. Greenland's
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  Speaker 4: not an issue. It's because the other issues you talk
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  Speaker 4: about on this show, it's the affordability and the accountability
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  Speaker 4: you were talking about before the break.
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  Speaker 2: Jeffrey, I cannot even figure out what Americans are saying
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  Speaker 2: to the president. Like I was even looking in my
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  Speaker 2: own social media comments after I was breaking down how
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  Speaker 2: this trade war and anyone who was saying like, we
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  Speaker 2: need to do this.
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  Speaker 1: We need to fight back against Canada. I would dig in.
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  Speaker 1: Every single one of them were bots.
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  Speaker 2: This is just Donald Trump's nonsensical vengeance that does not
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  Speaker 2: help any American businesses or any American voters. Neil, let
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  Speaker 2: me ask you quickly about inflation for a moment. Data
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  Speaker 2: out this morning is showing it is still an issue
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  Speaker 2: higher than the.
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  Speaker 1: Federal Reserve would like it to be.
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  Speaker 2: If you look at where interest rates are, despite what
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  Speaker 2: Scott Besson is trying to do, the market is saying
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  Speaker 2: things don't look great.
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  Speaker 5: Yeah, we really seem to be settled in around 3% inflation,
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  Speaker 5: well above the 2% the Fed targets. And keep in mind,
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  Speaker 5: that's 3% inflation over and above the inflation of the
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  Speaker 5: last five years. So, you know, when people say they're
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  Speaker 5: unhappy with the cost of living, with affordability, that's what
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  Speaker 5: they're talking about, the cumulative inflation over the last five years.
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  Speaker 5: And there's just not the credibility right now that it's
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  Speaker 5: coming down to two like the Fed wants. Kevin Warsh
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  Speaker 5: is speaking on Friday in Jackson Hole. I'm heading there tomorrow.
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  Speaker 5: We'll see what he has to say about the direction
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  Speaker 5: of policy going forward, whether they're going to do something
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  Speaker 5: more aggressive to try and bring inflation back to their target.
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  Speaker 4: Now, once again, I agree with everything you said, but
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  Speaker 4: what we just saw in the CPA data is the
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  Speaker 4: core data is up 3.7 percent. I would round that
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  Speaker 4: up a lot closer to four than to three. This
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  Speaker 4: is twice what the Fed's target is. So this is
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  Speaker 4: not good data. The inflation is really there. And there
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  Speaker 4: are some who expected maybe it'd be even worse than that.
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  Speaker 3: But this is a genuine concern.
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  Speaker 4: And the consumer good prices are going up.
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  Speaker 3: We know that oil is going up. And and we
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  Speaker 3: know that Putin is behind it all. That's a whole
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  Speaker 3: nother story.
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  Speaker 2: That's a whole other segment that Jeffrey will be back for.
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  Speaker 1: Neil, travel safe. Jeff, thank you for being here.
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  Speaker 2: Before we go, we just got a I want to
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  Speaker 2: read a passage from the statement that was released by A.G.
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  Speaker 2: Rob Bonta, Yale alumni, outlining some of the reforms as
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  Speaker 2: part of the settlement.
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  Speaker 1: Here we go.
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  Speaker 2: Today's settlement includes default daily time limits on social media
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  Speaker 2: and a block on overnight use that can only be
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  Speaker 2: lifted by a parent. Enhanced parent parental supervision tools, robust
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  Speaker 2: age assurance measures to detect users under the age of
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  Speaker 2: 18 and children under 13 that are on the platform
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  Speaker 2: and the appointment of an independent auditor to oversee compliance.
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  Speaker 2: That is a portion from Rob Bonta statement. And I'm
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  Speaker 2: just going to reiterate, I would love to have him
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  Speaker 2: back on this show. to discuss this and more.