Meta’s $18bn child-safety settlement in the US might have been branded a “watershed moment” by some; others are yet to be convinced, pointing out the tech giant has escaped relatively unharmed, while also avoiding the danger of founder Mark Zuckerberg being cross-examined.
The fact is that Meta was not forced to accept any liability while the penalty is just 1.13% of the company’s market capitalisation and it has 10 years to pay it off.
Meta’s share price also rose by 1.1% on the day the settlement was announced, resulting in a permanent boost of $16.17bn. Meanwhile, a unique condition in the settlement ties a portion ($5.3bn) of the pay-out to whether rivals like TikTok, YouTube, and Snapchat adopt similar rules.
It has been claimed that the advertising and marketing industry is anticipating a broader “retribution”, preparing for stricter safety regulations across the entire social media landscape, but will that day of reckoning ever come?
Probably not, says Herdify CEO and founder Tom Ridges. He commented: “Brands are stuck in a moral dilemma. With the latest Meta settlement claiming that its platform harms children, I’m sure there isn’t a CMO out there from a reputable brand who doesn’t feel deeply uncomfortable funding the platform. But pulling spend could simply benefit less ethical advertisers.
“The problem is, the status quo barely changes. Platforms pay fines, brands keep spending, and the cycle continues. But while I’d never argue social media doesn’t give you huge reach, it’s not the only way. Network effects have been used by all the biggest brands to grow, especially for social media companies. Most people think network effects are a ‘tech thing’, but they’re not; they are human behaviour.
“Brands can generate reach and growth independently of social platforms with offline, real-world advocacy. By tapping into where word of mouth exists, they can build long-term, meaningful connections with audiences who will spend more and spend for longer.
“So while the big platforms continue to do wrong, brands need to look at other paths for growth, or there will never be any incentive for them to behave responsibly.”
Even the UK Information Commissioner’s Office has waded in, releasing a statement in which it said: “Children’s privacy is one of our regulatory priorities. Our Children’s Code is clear that online services must design their products with children’s best interests in mind. We have taken, and will continue to take, action to drive improvements across the sector, including our ongoing work examining how social media and video-sharing platforms use children’s personal information in recommender systems.”
Meanwhile, the debate has been raging on LinkedIn.
Abbott healthcare senior director Josefa Lopez said: “The settlement may sound enormous, but if it barely affects the company financially and the share-price gain outweighs the penalty it may simply become another cost of doing business. Real accountability should be measured by enforceable changes, independent oversight, and whether children are actually better protected.”
And, fractional chief marketing officer Janelle Davis added: “Building those contingent terms in not only protects them from paying that money, but also is meant to ensure their competitors don’t get a leg up on them.
“This settlement just gave Meta a news opportunity to sound like they’ll make meaningful changes for children, which is likely what caused the stock to go up. But no one is really looking under the hood. And unless there’s a body to hold Meta accountable, I doubt these changes will even be meaningfully made.”
Even so, Lexicon president Stu Leventhal stressed that Meta is not the only company that carefully works its algorithms to entice and capture the interests of different marketplaces, including young people.
He added: “In many ways, it’s the entire social media and advertising landscape. Even on LinkedIn, if I reply to just one or two posts with a certain topic or opinion I suddenly get deluged with other similar posts.
“We have handed off our privacy and our abilities to discriminate to companies whose business is generating business. Capture the looks, and then monetise them.”
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