[Michael Barbaro]: From The New York Times, I'm Michael Barbaro. This is The Daily.

[News Clip]: Today we are here to announce an incredible landmark settlement with Meta.

[News Clip]: On Wednesday, Meta, the world's biggest social media company, reached a multibillion dollar legal settlement. It has directly contributed to our growing youth mental health crisis.

[News Clip]: Over claims that its technology including Instagram and Facebook are addictive.

[News Clip]: Meta knew about these risks.

[News Clip]: And a danger to children.

[News Clip]: But the size of the settlement is not what matters most to me or this team. What matters is that this agreement changes what young people will experience when they open their apps. And perhaps most importantly, the company agreed to impose sweeping new limits on how kids use its products.

[Michael Barbaro]: Today, business reporter Cecilia Kang on why a company and an industry that never backs down finally cut a deal and whether or not this truly marks a new era of accountability for big tech. It's Thursday, August 27th.

[Michael Barbaro]: Cecilia, thank you for making time for us on an extremely busy deadline day for you.

[Cecilia Kang]: I'm really happy to be here, Michael. Thank you.

[Michael Barbaro]: My pleasure. At a very high level, I wonder if you can describe this just hours old legal settlement and why it's being treated as so historic and so important.

[Cecilia Kang]: This is a really big deal. This is a landmark settlement between Meta and nearly every state. And it's about a pretty novel legal theory, which is that social media platforms like Instagram and YouTube are addictive, like cigarettes or opioids. And that was a really new argument presented in court starting this year. And it hinges on this idea that the company has harmed users by presenting one picture of its platforms as quite safe and healthy for young users. Whereas internally, the company knew differently, that it was actually really grappling with platforms and technologies that could be harmful for users.

[Michael Barbaro]: That they knew that this was dangerous. Which frankly reminds me a lot of the case that was made against the tobacco companies. They were telling the public one thing when they knew something else.

[Cecilia Kang]: That's right. At the heart of this is consumer deception. If the company deceived its users about the true nature of its product.

[Michael Barbaro]: And tell us in very broad strokes what's in the settlement. So, the settlement has a big monetary penalty piece of $17 billion that Meta will pay to nearly every state and the District of Columbia and US territories. It will be distributed amongst those states for different programs to sort of try to correct this problem of social media addiction. And then, which I find really interesting and could be the most lasting changes are changes to the products themselves. Meta has agreed to implement several tools and different changes to their platforms to make them safer for young users.

[Cecilia Kang]: Such as.

[Michael Barbaro]: There are several different things that they've agreed to. They've agreed to limit the number of hours that any teenager can be on any of its apps in a day. So, two-hour limits per day for teenage users.

[Cecilia Kang]: So, quite spelled out, two hours a day.

[Michael Barbaro]: Exactly. And they've also limited the use of these apps during sleeptime hours. Just complete blockage between midnight and 6:00 a.m. and a limit of notifications. So users, young teenage users, won't get notifications between 10:00 p.m. and 7:00 a.m.

[Michael Barbaro]: They've also agreed to do away with some tools that have been known to be pretty pernicious when it comes to the effect they have on young people. They're known as social comparison tools, like the like button.

[Cecilia Kang]: And so, one thing they've agreed to do is to do away with the count of likes that any post will have. And, you know, anybody who's on these sites know what it's like. You see the like button tally the number of hearts that you get. So, that will be barred as a default for teenagers. Another feature that will be banned is known as beauty filters. And these are really interesting. They're otherwise known as plastic surgery tools. They take your photo and they essentially edit it in the way that you want to change your appearance. And that also has been known to be really negative and harmful for body image, for the mental health of teenagers. So, they're going to ban that as well.

[Michael Barbaro]: I mean, these are being described as sweeping changes. And it does strike me that the restrictions Meta is now imposing, they're not just on overall use, hours or time of day, but of very specific features like you just described that have been understood to undermine the self-image and the mental health of young brains. And overall, I'm really struck that in this settlement, Meta is doing something that companies do not frequently do, which is drawing a big red circle around its marquee products and saying, "We're going to cut people off and we're going to limit the amount of time and the features you can use." That's very rare in our system.

[Cecilia Kang]: Yeah, I find it stunning, Michael, because it really strikes at the heart of Meta's business, which is a business of keeping you on as long as they can. This is a business that's about engagement so that they can target ads to you. So by limiting the amount of time teens are on, by limiting what they can do and the kinds of features that are known to be really sticky that lead to compulsive use, these are things that can really strike at the business model that Meta has built over these years into this powerhouse.

[Michael Barbaro]: Right?

[Cecilia Kang]: And the settlement is stunning for another reason in that Meta is a fighting company. It came into these cases and these trials extremely confident. They felt like they had a very strong defense and I've been covering this company for nearly two decades and I would describe them as like a pretty pugnacious company and defiant and to see them settle fairly early on in a set of trials that they have against them was really revealing.

[Michael Barbaro]: Well, tell us the story, Cecilia, of how Meta gets to a point where it drops its default, belligerence, and resistance to settlement. I mean, what it comes to understand about these lawsuits that made it realize or conclude that it was not going to win. It had to settle.

[Cecilia Kang]: The story begins with another case and a trial that began back in February brought by one woman who was then 20 years old who went by the initials KGM. She's from Chico, California. And she alone testified on stand in front of a jury and described just how painful it was for her to endure a lot of the mental health challenges that she faced that she linked directly to her use of social media apps.

[Michael Barbaro]: Right. You talked about this case and about this young woman actually on an episode of The Daily. It's one of many different lawsuits Meta was facing over the past year on this question of social media addiction, but just remind listeners what it was about this case and those like it that felt different than past legal challenges that social media companies like Meta have faced.

[Cecilia Kang]: Yeah. When KGM testified on the stand, she talked about things like body image issues, thoughts of suicide, self harm, all attributed to her constant use of Instagram, TikTok, YouTube, and how she would go down these rabbit holes that led to body dysmorphia and real social anxiety and depression, and how in many ways she lost her childhood by being on social media so much and for so many hours really in the day. And when she was talking, I think what in our interviews with people there and the jury later, everybody could relate if they directly weren't affected. They knew somebody who did have somewhat of a similar experience where they just knew that they had an unhealthy relationship with social media apps that they were on too much. And you look around anywhere and you see teens that are glued into their phones and it just makes people uncomfortable. And all of those personal experiences and the testimony we heard from KGM. What that did was it put a face on some theories that Meta has just very defiantly rebuked in public has said that they just not true. You can't prove that social media causes mental health harms. But to hear her stories and the stories that a jury agreed with and bought really and sided with unanimously showed that the public was in a very different place than Meta was. The public was in a place where they were pretty angry at social media and the reputation of Meta was on the line.

[Michael Barbaro]: So from what you're saying, Meta in a case like this is losing in the court, but not just in the court. It's kind of losing in the court of public opinion. But what was it about the legal argument in this case, which you just said was successful against Meta that proved so potent?

[Cecilia Kang]: So what KGM was arguing was that she was personally injured. Her legal argument was a very basic tort argument of personal injury. That's essentially like suing a crib maker for a broken crib or some other sort of product defect.

[Michael Barbaro]: What Meta was relying on was a legal shield that it relies on all the time and every internet company has relied on for decades to protect itself from any sort of legal liability for the content that it hosts. It is essentially a speech shield known as Section 230 of the Communications Decency Act and it's been an extremely successful tool and powerful tool used by the internet industry.

[Cecilia Kang]: Right? We've talked about it a lot on the show. Basically, the argument goes, we're not responsible for the awfulness of what people post on our platform. We are just a platform that hosts that awfulness. Therefore, we cannot be held legally liable for the bad things that happen downstream of that awfulness.

[Michael Barbaro]: That's right. And Meta went into this trial and others preparing to use that shield. And the Section 230 shield that they evoked yet again just did not work in this case because the plaintiff KGM was simply saying this is not about speech. You have a technology that is defective and that gets around the speech arguments. And the jury agreed that this was a problem with the tools, the technology that Meta and in this case YouTube had used to get users to come back more and more often for compulsive use. So there was almost like the two sides were speaking in different languages and the language of the young woman won out.

[Michael Barbaro]: So, how exactly does Meta losing this lawsuit from KGM end up bringing us to Wednesday's historic settlement with dozens of states around the country.

[Cecilia Kang]: So, with that loss and another big one, they were on a losing streak and the wall that had protected them for so long was beginning to crumble. And the state AG's also wanted to circumvent the Section 230 claim of this being an issue about the content that the company hosts. They say, and it's a really simple argument, that the company violated state consumer protection laws by saying their product was very safe, but knew that it really wasn't. So, they said it was deception claim. And they also claimed that the company violated federal child privacy laws. So at this point, Meta is not feeling as confident about its chances in court against the states. They were willing to come to the negotiating table ahead of this big trial with the state attorney generals because for the first time they were on their heels when it came to legal strategy and their legal position.

[Michael Barbaro]: We'll be right back.

[Michael Barbaro]: Cecilia, as we get into the details of the settlement, I want to start with the dollar figure of $17 billion. Is that a big amount of money? The context that comes to my mind is that Meta is worth $1 trillion.

[Cecilia Kang]: Look, I never like to say that a few billion dollars here or there is not a lot of money because it feels like a lot of money and it is a record for the tech industry by state attorneys generals to reach a settlement of this amount. And it also is the largest settlement by a coalition of states just after the tobacco settlement of 1998. So this is a lot of money. The other question you had was, is this a lot of money for Meta? In the grand scheme of things, no. $17 billion is arguably not a lot of money for Meta because they made $200 billion in revenue last year, but they're potentially on the hook for a lot more because they face thousands of more lawsuits and those people who are suing Meta are watching this settlement agreement and they're wondering how much they might be able to get as well. So, the number can go up and Meta does not want to fight forever legal wars. So they will be motivated to settle.

[Michael Barbaro]: So in total, this is just perhaps the tip of the iceberg.

[Cecilia Kang]: Understood.

[Michael Barbaro]: So let's now turn to what feels like the real heart of this settlement, which are the restrictions Meta says it will now be imposing on its own social media products. And let's start with something like the 2-hour time limit that it's going to be putting in place. Where do you think that number comes from and how meaningful is it?

[Cecilia Kang]: So that number comes from social science research that shows that if left to their own devices, kids will stay on social media for a long time. Not all kids, but there is a meaningful number of kids who cannot regulate and they stay on for hours. Meta will say that the vast majority of teens on their site do not stay on for even two hours. But they also know that there are many teens still who spend just simply too much time.

[Michael Barbaro]: Right? Super super users. Yeah, super users, the uber users. And this is meant to address that problem. The kid who's just holed up in their room on the weekend for hours and hours and comes out kind of in a daze because they've gone down rabbit holes all day on whatever interest they have.

[Cecilia Kang]: So that addresses the question of time on these platforms.

[Michael Barbaro]: Talk for a moment about the measures Meta is taking that relate to self-esteem, getting rid of account on likes for younger people, getting rid of beauty filters, and exactly how that works and whether that is seen as really reducing some of the risks that people like KGM identified in her lawsuit against Meta.

[Cecilia Kang]: Yeah, in some ways KGM's the perfect case study. What happened with her is that as she was using these third-party beauty filters actually on Instagram, it just really fed into her own body image issues and she also was getting deeper and deeper into these rabbit holes looking into content that dealt with physical appearance and it just really affected her negatively in terms of how she viewed herself and her developing self as a teenager. And when it comes to those like counts, it's a really important measure because when a teenager posts something on Instagram, they are constantly seeing how many likes they get. And for teenagers, there's been numerous studies that show that that's caused a lot of anxiety. It becomes a very unhealthy desire by young people to see that number go up. And by eliminating that feature, it will hopefully address some of that anxiety that teens feel. Will it be a panacea for all the features that are known to be addictive and lead to compulsive abuse? That's really unclear because there are so many things that have been engineered into these sites to keep teens hooked and keep them there longer. So, what we're seeing is the beginnings of some remedies.

[Michael Barbaro]: How would this actually work, do you think? Would these restrictions we're talking about be placed on the version of Instagram that's designed for teenagers? And when it comes to something like this 2-hour time limit, would Instagram just cut you off after 2 hours? Would it give you any kind of a warning or what?

[Cecilia Kang]: This change really is directed at just teens. So, yes, it'll be notifications. It'll be a reminder you've been on too long. It'll be possibly restriction. All of these specific changes are going to be rolled out within months. But as of now, we know that these are not changes for all of its users, is directed just to teens. And if you are a teen and you're registered teens, it'll be a default.

[Michael Barbaro]: But the inevitable question, how will Instagram know if you're a teenager and you're just using regular old Instagram and you haven't told Instagram how old you are?

[Cecilia Kang]: Well, I mean, this is the key here. In the settlement, they said that they're going to strengthen what's known as age verification tools. But historically, Meta and just about every other internet company has been really just not very good at that. They've just really struggled with doing that. Kids are really, really good at getting around age verification tools. And it's not even just that kids are cunning. It's often times age verification is just too easy to get past. It's just a simple drop-down box that asks how old you are and then there's no proof that you have to provide that you are that age.

[Michael Barbaro]: Has Meta given any specifics to the attorneys general in the settlement about what this age restriction system might look like? In Europe and other places, there is literally an AI selfie that you have to take to prove your age to use certain websites. I mean, it seems like the technology is out there.

[Cecilia Kang]: Yeah, there's not a lot of detail right now. And you mentioned something really important is that in places where say photos are used for verification, that's going to be a really tricky legal question for these states and the companies because the more information you provide to verify age, the more you run up against concerns of privacy and whether you're collecting too much data about young people. So that's a detail again that will really matter in terms of understanding just how much teeth some of these product changes actually have.

[Michael Barbaro]: I know that the details of this are yet to emerge the specific way that these new restrictions are going to work. But let's assume for a minute that to some degree they do work and suddenly a large group of young people who are used to unfettered access to these apps suddenly find that their time on them is really restricted. It strikes me that that's a little bit like telling somebody who drinks a lot every day and is maybe addicted to alcohol that suddenly they're cut off after one beer. And if this is truly addictive, then being cut off like that could be pretty difficult, I imagine, for some young people to deal with. And what do they do? Do they just go to TikTok? Do they just go to Snapchat?

[Cecilia Kang]: It's a great point, Michael. And actually that's Meta's argument in the settlement that the states really need to strike a similar agreement with all the other social media platforms. They can't be the only one out there because you'll just see teens migrate to other sites is what Meta says.

[Michael Barbaro]: And if I were to venture a guess, I would say that you will see the other social media companies negotiate. I cannot imagine why they would want to fight when they're facing the same arguments that Meta also was facing in this trial against states and the other trials that they face.

[Cecilia Kang]: Mhm.

[Michael Barbaro]: Well, in a world where suddenly all of these social media companies have reached big sweeping expensive deals with state attorneys general, which it sounds like could be a reality in the next few months or years. The observation I have, and perhaps it's not all that earthshattering to you, is that the federal government, especially Congress, is not doing anything in this situation. And they could have imposed the kinds of restrictions on social media companies that we're talking about at any moment over the past 20 years and didn't. And everything we're talking about here has really stemmed instead from the public, from teenagers, their parents testifying in these trials, bringing these lawsuits, and then the jurors who are returning these verdicts against these companies.

[Cecilia Kang]: It's incredible, Michael. I've been covering tech policy for decades now and I've seen Congress debate promise and battle over internet regulations for all that time and the net result has been zero regulations. What I've seen with these cases, these lawsuits, is big changes in terms of settlements and verdicts that have held these social media companies to account. And they've done this within the span of about six months when Congress has been working on this for years.

[Michael Barbaro]: And to your point, it has been people. It has been the public, the general public that is making these decisions. And while there's a lot of impatience about what's happening in Congress, the people are not waiting.

[Michael Barbaro]: I want to end Cecilia with a question about the rest of us, the not teenagers and not kids, because this settlement was all about young people. But if apps are as addictive as these lawsuits claim and to some degree as the companies internally do seem to recognize, then how should we think about the risk to adults and when we're supposed to get cut off from these apps? I'm curious about how you think of your own use as you ask that question because—

[Cecilia Kang]: Don't ask. I mean, I literally ask that question because there are nights where I engage in the endless infinite scroll and I almost wish someone would take the thing away from me.

[Michael Barbaro]: Yeah. So, I want to go back to tobacco. And the reason why I do is that when those lawsuits began, when the challenges began, there was a general agreement in the public that cigarettes were like marginally bad. Maybe, but you know that maybe these lawsuits were overreaching.

[Cecilia Kang]: Look at where we are today and the change of consumer behavior. I think through these lawsuits, discovery, regulations, what happened is that the public woke up and they realized actually there is net zero good when it comes to smoking cigarettes. And when it comes to social media, we may not get to a net zero good impression about social media, but certainly we're getting to a place where there is a lot more awareness of the harms and people are saying that they feel much better when they're not online. They're self-regulating. I see this anecdotally all the time, people just leaving their phone at home and not taking them into restaurants, that kind of a thing. So, it's really on all of us. It's kind of like put a mirror up to yourself.

[Michael Barbaro]: And it could take time, but as I look at the cigarette industry and what happened with big tobacco, that might be a road map, albeit a very long timeline on that road map, but a road map.

[Cecilia Kang]: Right? These settlements, the publicity, they filter through the culture.

[Michael Barbaro]: Yes.

[Cecilia Kang]: Yes.

[Michael Barbaro]: Well, Cecilia, truly, thank you very much.

[Cecilia Kang]: Thanks so much, Michael.

[Michael Barbaro]: We'll be right back. Here's what else you need to know today. On Wednesday, terrifying floods on the border between Nepal and Tibet killed at least 160 people and possibly many more as they swept away homes, cars, and people in their path. Scientists said it appeared that an enormous chunk of ice, possibly a half mile wide, had snapped off a glacier high up in the Himalayas and tumbled into a river valley below, triggering the deadly floods.

[Michael Barbaro]: And US regulators have approved the first drug to substantially extend the lives of patients with pancreatic cancer. Long seen as one of the most hopeless diseases in medicine. The drug taken as two pills a day is not a cure for the deadly cancer. But in a key clinical trial, those who received the treatment lived twice as long as those who got chemotherapy.

[Michael Barbaro]: Today's episode was produced by Olivia Nat, Michael Simon Johnson, and Jack Didoro. It was edited by Rob Zipco, and Rachel Quester with help from Liz O. Balen. Contains music by Diane Wong and was engineered by Chris Wood. Our theme music is by Wonderly. That's it for The Daily. I'm Michael Barbaro. See you tomorrow.