After impacting two generations, Meta has been ordered to pay $18 billion in damages.

In 1998, attorneys general from 46 U.S. states joined forces to sue the four major tobacco giants, and the case ultimately ended with a sky-high settlement of 206 billion U.S. dollars.

That lawsuit not only forced tobacco companies to pay huge compensations, but also fundamentally changed the operating rules of the entire industry — banning advertisements targeting minors, prohibiting the promotion of cigarettes with cartoon images, and mandating health warnings printed on product packaging. Since then, the smoking rate in the United States has almost halved.

28 years later, the same script is staged with different protagonists.

On local time August 26, Meta reached a settlement with attorneys general from 52 U.S. states and territories, agreeing to pay up to about 18 billion U.S. dollars and implement a series of mandatory product changes on Instagram and Facebook.

This is one of the largest civil settlements ever against a tech company, and it is also the first time in the social media industry that companies have been forced to make fundamental changes at the product level for "getting children addicted".

01

Meta Admitted Defeat in Advance

The timing of this settlement is very interesting. Just one day before the settlement was announced, Adam Mosseri, head of Instagram, was still testifying in court in Oakland, California, while Meta CEO Mark Zuckerberg was expected to appear in court in the following days.

This federal lawsuit, led by California, Colorado, New Jersey and Kentucky and jointly initiated by 29 states, only opened on August 18.

The plaintiff claimed for as high as 1.4 trillion U.S. dollars, accusing Meta of deliberately designing features such as infinite scrolling feeds, algorithmic recommendations and high-frequency push notifications to make teenagers addicted, while concealing the harm of the platform to minors' mental health from the public despite being aware of the risks, and illegally collecting personal data of children under 13 in violation of the Children's Online Privacy Protection Act (COPPA).

Meta chose to settle on the 8th day of the trial, which shows that it is fully aware of the catastrophic consequences that a jury verdict may bring.

In fact, several verdicts earlier this year have sent a clear signal. In March, a New Mexico jury found Meta violated the state's Unfair Trade Practices Act and sentenced a fine of 375 million U.S. dollars. On August 6, the judge in the same case further ruled that Meta had created a "public nuisance", adding 567 million U.S. dollars in compensation and requiring the implementation of youth protection measures. Also in March, a jury in Los Angeles ruled in a lawsuit against individual plaintiffs that Meta and Google should be held responsible for a teenage girl's depression and anxiety, with a total compensation of 6 million U.S. dollars.

One unfavorable verdict after another made Meta realize that the risk of continuing the lawsuit is far greater than the cost of paying to settle the matter.

Product rules for the post-social media era will be strictly restricted | Image source: Medium

As for the 18 billion U.S. dollar settlement, its amount structure is quite complicated, which is why media reports have different figures.

Overall, Meta will pay up to about 18 billion U.S. dollars in installments over the next 10 years.

Among them, the "participating states" will receive about 12.7 billion U.S. dollars, accounting for 70% of the total, which will be used for youth online safety programs, crisis intervention services, after-school activities and mental health projects. California alone is expected to receive 1.5 billion to 2.1 billion U.S. dollars. In addition, the settlement also resolves privacy lawsuits filed by California, Illinois, New Mexico and Washington D.C. over the Cambridge Analytica scandal, involving an amount of about 459 million U.S. dollars.

18 billion U.S. dollars is a large number, but from the perspective of Meta's size, it is not fatal. Meta's total revenue in 2025 exceeded 201 billion U.S. dollars, and its revenue in the second quarter of this year alone reached 60.8 billion U.S. dollars. Meta itself stated that it will accrue about 10 billion U.S. dollars in legal fees in the third quarter of 2026, and the remaining amount will be allocated over the following 9 years.

After the settlement news was released, Meta's stock price rose by about 4.4% in pre-market trading.

The market's reaction is straightforward — paying money to eliminate disasters, the long-awaited outcome is finally settled, which is good news.

But what really deserves attention is not the money.

02

Putting "Clamps" on Social Media

The most important part of the settlement agreement is a series of mandatory product changes. These are not feature updates voluntarily launched by Meta, but hard requirements written into legal documents, supervised and implemented by independent auditors, and valid for up to 10 years.

Specifically including:

Time Limit. The daily usage duration of users aged 13 to 17 on Facebook and Instagram is strictly limited to 2 hours in total for the two apps. Only parents can adjust this upper limit. After every 15 minutes of continuous use, the system must pop up a prompt to remind the user to stop.

Night Lock. Minor users cannot access the apps by default between midnight and 6 a.m. Similarly, only parents can lift this restriction.

Mute During School Hours. During school hours from 8 a.m. to 3 p.m., the system will restrict sending push notifications to minor users.

Hide Social Comparison Data. Minor users will not be able to see the number of likes on posts and other interaction data by default. Extreme beauty filters will also be blocked.

Non-Algorithmic Option. Teenagers will be able to choose a feed not driven by recommendation algorithms as their default browsing method.

Stricter Age Identification. Meta must strengthen technical measures to identify minor users who falsely report their age, detect users under 18 years old and remove accounts of children under 13. Private accounts will be enabled by default to restrict contact between suspicious adults and minor users.

Quick Response. 90% of reports from teen users must be responded to within 6 hours.

Independent Audit. An independent auditor will be appointed, with broad access to Meta's systems, to supervise compliance implementation for at least 5 years.

The combination of these clauses means that the core growth engines of social products, namely algorithmic recommendation, infinite scrolling, push notification wake-up and social comparison, will be systematically dismantled or restricted when targeting minors.

03

Must Bring "Accomplices" Along

The most shrewd design in Meta's settlement this time is hidden in the remaining 30% of the compensation.

The settlement agreement stipulates that Meta will first pay about 12.7 billion U.S. dollars (70%) to the participating states. Whether the remaining about 5.3 billion U.S. dollars (30%) will be paid depends on one condition — whether YouTube and TikTok also agree to implement similar restriction measures and each pay about 5 billion U.S. dollars.

In other words, Meta used the legal settlement agreement to tie its competitors in as well.

Because if only Meta restricts the usage duration of teenagers, the only result will be that users flow to TikTok and YouTube. Meta's Chief Legal Officer C.J. Mahoney said very straightforwardly in the statement: "Teenagers seamlessly switch between dozens of apps every day. To achieve real progress, we need industry-wide solutions."

Meta even published an open letter on the day of the settlement, directly calling on TikTok and YouTube to join this framework. The wording in the letter is very interesting — it no longer looks like a defendant defending itself, but like a rule-setter of the industry putting pressure on its peers.

If YouTube and TikTok refuse to follow up, Meta saves 5.3 billion U.S. dollars, and at the same time can accuse competitors of being unwilling to protect children at the public relations level. If they follow up, the entire industry will be restricted together, and the competitive environment will at least be fair. No matter what the result is, Meta has nothing to lose.

It is worth noting that just three days before Meta's settlement, TikTok and ByteDance had just reached a 400 million U.S. dollar settlement with the U.S. Department of Justice, settling a children's privacy lawsuit that began during the Biden administration.

The gap between 400 million U.S. dollars and 18 billion U.S. dollars is enough to show that in the eyes of U.S. regulators, "addictive design" and "data violation" are problems of completely different magnitudes. And Meta's settlement clauses are pushing this higher standard to the entire industry.

04

The "Tobacco Moment" of Social Media

The 1998 tobacco settlement amounted to 206 billion U.S. dollars (about 410 billion U.S. dollars at today's purchasing power), far exceeding Meta's 18 billion. But more critically, that settlement changed the relationship between an entire generation and tobacco — not because the fines bankrupted tobacco companies (they are still doing well), but because the subsequent advertising bans, public place smoking bans and health warnings fundamentally changed society's perception of smoking behavior.

Meta's settlement is following the same path.

Comparing the algorithmic design of social media to industrial pollution, and feed addiction to nicotine dependence — once this legal framework is accepted by courts and legislators, the subsequent impact will be chained.

The New Mexico court has used the legal concept of "public nuisance" to characterize Meta's behavior, a concept originally used to govern factory sewage discharge. When "algorithmic recommendation" and "chemical wastewater" are discussed in the same framework in the legal sense, the legal risks of the entire industry will be repriced.

At present, there are still nearly 2,900 pending cases in the Multi-District Litigation (MDL 3047) of the Federal Court for the Northern District of California. The defendants include not only Meta, but also TikTok, Snap and YouTube. The Indiana Attorney General has clearly stated in a statement that the next step will be to seek "similar protective measures" against Discord, Roblox, Snapchat, TikTok and YouTube.

For the overseas business of Chinese companies, this signal could not be clearer.

ByteDance's TikTok in the United States is already facing the same legal pressure as Meta, and the clause in Meta's settlement agreement that drags TikTok into the framework is more like a "naming notice". When the attorneys general of 52 U.S. states have formed a bipartisan consensus that "social media makes children addicted", no social product operating in the United States can stay out of it.

After 1998, no one dared to publicly claim that "smoking is harmless to teenagers".

After 2026, I am afraid no social platform will dare to say "our algorithms will not make children addicted". The only difference is that tobacco companies took decades to reach that point, while social media took less than ten years.

Many years later, when people look back on the present, they may say in a joking tone: "It was so crazy back then, they actually let children use social media!" This absurd fact is probably another "detour that humanity has to take".

This article is from the WeChat official account "GeekPark" (ID: geekpark), author: Hualing Wuwang, editor: Jing Yu, published with authorization from 36Kr.