Meta Social Media Addiction Trial

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0:32This is Bloomberg Law with June Grosso from Bloomberg Radio. It's the very definition of a high-stakes trial. Dozens of state attorneys general are suing Meta, claiming it uses unprecedented technology to entice, engage, and ensnare teenagers and children, harming their mental health. At stake, a damages claim of$1.4 trillion, very close to the social media giant's market cap, plus the imposition of fundamental structural changes to the platform. The trial is the latest in an avalanche of lawsuits against Meta and other social media companies, including Google's YouTube, TikTok, and Snap. Overclaims their platforms harm young people, illegally collect their data, and are deliberately designed to addict them.

1:29My guest is an expert in Internet law, Eric Goldman, a professor at Santa Clara University School of Law and co-director of the High Tech Law Institute. Eric, this is a very high stakes trial. Tell us what's at stake here. In this trial, the state attorneys general are pursuing the social media defendants for a number of claims, including claiming that they are a public nuisance. The state attorneys general have asked for$1.4 trillion worth of damages, which, if issued, would represent a major chunk of the overall value that those entities are worth. The case also potentially puts in play structural remedies that would change how social media services operate.

2:18So between the damages of words and the possibility of structural reform, it's possible that these cases will change social media structurally. The state attorneys general are saying that Meta designed the platforms to get children and teenagers hooked. Tell us more about the allegations here. There's a lot of allegations, so it's a little hard to summarize. You hinted at one of them. The state attorneys general are arguing that social media services were designed to be addictive, in fact, addicted the users, and that addiction caused harm. They've also claimed, for example, that the social media services knew about that addictive attributes and harm and failed to disclose it to the public.

3:02and they're also claiming that the consequences of this addiction are harming society generally. Obviously, Meta denies the allegations. What specifically has it said? And I just want to point out that you keep using the term Meta. There are multiple social media services in play here, so just want to be clear about that. The social media defendants are defending on a wide range of grounds. They're defending on the position that the claims that are being advanced against them simply don't fit the facts that what the social media services have done is not illegal and therefore there should be no remedy for it.

3:42They have argued that the First Amendment applies to their decisions, that they're acting like publishers making editorial decisions and basing liability on those editorial decisions is inconsistent with the First Amendment. And they're claiming that Section 230 applies. Section 230 says websites aren't liable for third-party content. And a lot of the arguments about addiction are ultimately about the delivery of third-party content. And therefore, the social media defendants argue that Section 230 should preempt those claims. So I hear seven weeks of trial. How do the state AGs go about trying to prove their claim?

4:21Are we going to hear from individual teenagers? Are we going to hear from experts in social media? I mean, what kind of witnesses will they use? I think that they'll use a variety of different experts who will try to bolster the argument that the social media services engaged in addictive practices and, in fact, caused harm. Both of those propositions are not scientifically established. The state agencies will have to make a case for them. I would assume that we will hear from individual victims. We might also hear from former company employees who have inside information and maybe others. So far, it seems like Meta hasn't fared well before juries.

5:07You had the case that we talked about before where in Los Angeles in state court, a jury awarded a woman$6 million in a case involving claims that Meta and Google's YouTube caused her anxiety and depression. And then we had this New Mexico jury, which deliberating less than a day awarded$375 million in civil penalties. And then last week, the judge added on an additional$567 million. Is Meta on the losing end so far of all these trials? The cases are not going well for Meta, or for that matter, for other social media defendants. The judges and the juries have generally looked disfavorably on the arguments that they're making.

5:52However, these cases are all going to go up on appeal, and there's no reason to believe that the jury or judge verdicts are going to survive intact. There are a number of good arguments that the defendants will make on appeal, and if they can succeed on any one of those arguments, it's possible that some or all of the lower court rulings will be undone. So I haven't put a lot of stock in where we stand today, other than its data points. The juries are sending a message that they do hold social media services culpable for harming their users. Whether or not the law recognizes that harm and upholds the legal consequences that have been assigned to it remains to be seen on appeal.

6:39Is the strongest argument on appeal that the social media platforms have had immunity from prosecution over the content that users post and states are trying to sidestep that by going after the product design features? I think there are several strong arguments that will be advanced on appeal in this case and in frankly all of the cases. Section 230 is one of those. Section 230 says that the services can't be responsible for third-party content. And ultimately, given that they're basic businesses, the delivery of third-party content, Section 230 clearly casts a long shadow. But I think the First Amendment arguments are even more obvious and, in some respects, even more troubling.

7:23In the end, social media services are engaging in publication of content. Whether it's third-party content or first-party content, the First Amendment applies equally in that circumstance. As a result, to the extent that social media defendants are being held legally liable for their editorial decisions, that sounds like a problem, and that sounds like the kind of thing that an appellate court will pay attention to. The damages of$1.4 trillion, Meta's market cap is$1.5 trillion. I mean, where does that number come from? The number might have a little bit of fiction to it. It might be a fantasy land computation, but it doesn't really matter if that number is the right number.

8:09It really is more the order of magnitude of the state attorney's general position. They are saying that if the social media services are causing as much or more damage as their market cap, they literally shouldn't exist. They're basically trying to drive the value of those companies to near zero. And so that's why I think that the number is so helpful at crystallizing the stakes of this case. It's a reminder that the arguments that state agencies are advancing potentially make social media services untenable, not profitable, and maybe no longer a viable market. They're also demanding changes besides this staggering sum.

8:52Are the changes to the platforms that the state AGs are asking for, would they change, you know, the very essence of the way these companies' social media platforms work? Unquestionably, the structural remedies that are being ordered by courts and also mandated by legislatures will change how social media operates. What's less clear today is if they're going to change it in a way that will materially affect our willingness to use them. And I'm going to give you an example because I think it's so helpful. The New Mexico judge set a cap on the number of hours that a user could use the service in a month.

9:35Now, that cap was pretty generous. That's a lot of hours. I think it was 90. But imagine that a different judge, based on some other assessment of the science, such that any of these decisions are based on that, It decides that the number is much, much lower. Let's pick a number for a moment. It says that only five hours a month is permissible. At that point, then, many users will no longer be able to engage in the community the way they're currently engaging. And it'll just starve the ecosystem for the engagement that's been driving it. There'll be less people there. There'll be contributing less.

10:07There'll be less people to consume it. And as a result, the ecosystem goes into a death spiral. It just can no longer function as the kind of vibrant conversation that we've assumed. Now, I'm just giving you a speculative scenario. I don't know if that scenario is going to play out, but it's helpful to show how one small product change ordered by a court or legislature could easily trigger a downward spiral and multiply that by the dozens, if not hundreds of different product changes that courts could issue or that legislatures have already mandated. And we can see that the ecosystem is under extraordinary pressure and may not survive it.

10:48So Meta, as we said, broadly denies the allegations. But they also say that social media addiction is not a recognized psychiatric condition. That's correct. There is no medical recognition or psychological recognition of a thing called social media addiction. That argument was in play in the Los Angeles bellwether trial, and the jury was convinced enough that something was recognizable sufficient to support the damages award that they issued. Having said that, it's a reminder that the science here is actually quite contested and may not back up the arguments that the state attorneys general are making.

11:30In other words, their general position is social media is an evil. It just harms people. It's laying waste to people's lives and our communities. And the science just doesn't back that up at all. And so they're having to create a scientific fiction, a thing called social addiction that's not recognized elsewhere, and then predicating legal consequences on that. That's one of the kinds of things that could also be addressed on appeal. Coming up next on the Bloomberg Law Show, I'll continue this conversation with Professor Eric Goldman of Santa Clara University Law School. The jury's being picked today, but it's only an advisory jury.

12:06We'll tell you what that means. I'm June Grosso, and you're listening to Bloomberg. Jury selection began today in Metta's federal trial over claims its platforms have harmed youth mental health and also tracked children in violation of federal law. The trial itself is scheduled to begin next week and is expected to last six to eight weeks. Metta faces 29 states in the federal multi-district lawsuit filed in 2023, but the Oakland trial will only include the first four states, California, Colorado, Kentucky, and New Jersey. I've been talking to Professor Eric Goldman of Santa Clara University Law School, an expert in Internet law.

12:55Eric, when I look at the claims on both sides in these social media addiction trials, sort of clinically, just on paper, I wonder if these multimillion dollar verdicts are due to a jury sympathizing with these teenagers who are struggling with terrible mental health problems. when on the other side you have these huge social media companies. You know, it's just like the sympathy factor of a jury as opposed to if this were maybe a judge trial. Well, two things about that. First, I will remind you that in the Los Angeles bellwether trial, the jury was non-unanimous. It was a 10-2 decision. And that's a sign that not all the jurors are on board with the arguments that they're hearing, even if they feel extraordinary sympathy towards any particular victim.

13:45Now, when the state AG case is starting, the judge is actually going to make all decisions. She's appointed an advisory jury to give her input on certain things, but the judge will make the final call about the arguments. And so to the extent that it's a jury who has her passions inflamed by a harmed victim, the state AG case might look different. I will also add that in the state AG case, the attorneys general are speaking on behalf of the entire community, which actually waters down the impact of any individual victim's story. This judge, Yvonne Gonzalez Rogers, also used an advisory jury in the Elon Musk-Sam Altman trial.

14:31It's very rare, and she's using it in this huge case. Are there any problems with using an advisory jury? I must confess, I'm not a civil proceduralist, so I don't know what the rules are about advisory juries. I have heard of them before. And I think part of the judge's consideration is the judge doesn't necessarily want to just rely on her own position. She'd like to hear how the community is feeling about the arguments that they're hearing. And that makes sense to me because the cases are really about the social media's impact on the community. And the judge may not even be a heavy social media user, may not have the kinds of experiences that the jury does.

15:11There's always a possibility of settlement. Settlement is always a possibility. And Bloomberg Intelligence looking at major big tech settlements in the past decade, like Meta's$5 billion deal with the FTC and Amazon's$2.5 billion deal with the FTC. So BI estimates a possible settlement of between$4 and$7 billion in this case. What do you think? To be honest, I think if Meta, speaking just about Meta, if Meta thought it could settle this case for$7 billion and avoid all future liability, it'd probably write that check happily. But I don't think those are the right numbers, so it sounds very low.

15:55I'm guessing that both the state AGs and the other plaintiffs, including individual plaintiffs, have much higher numbers in mind. Remember, though, in the Bellwater trial, I believe that the one plaintiff in the first bellwether asked her$100 million. She ended up with not that much, though. The verdict was$6 million. Right. So going back to the evaluation, you know, how much is each case worth? And I will note that if there are, and we're going to pick a number for a moment, there are 3 ,000 victims who are in either the state or federal consolidated cases. If the number is 3 ,000, which might be a little overstated, but work with me.

16:33If the number is 3 ,000 victims and each was worth$6 million, which is the number we got from the first Bellwood trial, that's actually closer to$20 billion. That's just for the individual victims, not the state AGs, not the Native American tribes. A single-digit billion number is probably quite low if the parties are going to settle. But I don't think that they're likely to settle, and there's two reasons why. I'm guessing the social media defendants are hopeful that they can knock out big chunks of the case on appeal. And also, a settlement would need to be global in nature. It would have to deal with all victims who might have a claim.

17:11And there's not a clear path by which the social media defendants can put all potential victims into a single settlement. And without a mechanism to do that, I think settlement is actually quite remote. This lawsuit is one of more than 3 ,000 filed by school districts, individuals and others in federal court. And then there are a second group of more than 3 ,000 in state court. Historically, is there another kind of mass tort litigation you could compare this to? Maybe the tobacco litigation? Yeah, we've had other mass tort claims. Asbestos is one of them. Tobacco is another. I don't have an inventory of them, but they happen.

17:57And they're extraordinarily high stakes for both the plaintiffs and the defendants. The numbers boggle our mind in terms of the amount of wealth that's going to be moved one way or another. And this case fits that model. I don't know that it's going to have the same result. There are some major differences between a mass tort involving a physical product causing a physical injury and a online service causing many intangible injuries. It doesn't quite fit the historical model. What poses more of a danger to the social media companies? Lawsuits like this or legislation in the U.S. and worldwide to limit them?

18:39I don't rank the dangers and risk. I would say look at it more like a portfolio approach. Think about all of the different cases and all of the different legislation as a portfolio of threats. And the question is, do the cumulative risks pose danger to the defendants? And the answer in my mind is clearly yes. But I don't know which one of the cases or which set of the cases or which one of the laws or set of the laws will pose the greatest threat. But the overall aggregate effect of the cases and the laws poses a major threat to the social media defendants. There's one other threat I'm going to mention.

19:20The investors in these companies are assuming they're going to get market returns or better from their investments. And as the threats grow larger, the investors keep recalculating their valuations. And so another scenario is that the investors are going to put some substantial pressure on the social media defendants to do something, whether that's change their offerings or settle or both, in order to preserve their investment expectations. So the threats are really multitudinous, and it's not just the legal threat. So 10 years from now, do you think that the social media landscape will be very different?

19:59I don't see how the current social media ecosystem is going to survive in its current form in the next 10 years. That strikes me as extremely unlikely because of all of the legal threats and other changes in society. I just don't see how that could be possible. The only way it might happen is if the Supreme Court issues a massive ruling that preempts a lot of the cases and the laws, such that we have to rethink everything from a legal standpoint. But absent that, I believe that the cumulative effect of the laws and litigation will force social media services to change. And I'm concerned about that because it means that where we take it for granted that today we can talk to each other freely online, I don't know that that's going to be the net outcome when all these changes have taken place.

20:55What we are going to see, I think, instead is a circumscription of our ability to talk to each other and in ways I think will make our lives less rich for many people. Eric, do you think that, let's take Meta, do you think that Meta has learned anything from the New Mexico trial and the California trial and it might change its tactics? Because, I mean, their defenses sound pretty much the same. meta seems impervious to the feedback that it has been getting for a very long time about the concerns that people have with its decision making it seems to be making the same basic mistakes over and over again both in terms of how it treats its users and also how it's been approaching the legal risk that it faces so i don't think meta is likely to learn any lesson from any particular development.

21:50The most likely way that Meta would change its tune is when the investors start putting pressure on it. If Meta isn't delivering the kind of equity returns that its investors respect, that will catch their attention. I think everything else is unlikely to change who they are. Meta always talks about, we've done this, we've done that, you know, we listened to your concerns about teenagers. Have they done anything that's really helpful? Oh, no doubt that Meta has taken a number of steps that are designed to improve the experiences for its users and keep them safer. Having said that, Meta has also consistently, if in doubt, chosen options that prioritize user engagement over user health.

22:34And that's why I think there are so many disgruntled former Meta employees who are turning into whistleblowers or critics or witnesses against Meta because they feel like they weren't heard when they raised concerns about the effects of decisions on their users. And what are some of the far reaching consequences if the state AGs win here? If the state AGs prevail in their theories against social media defendants, it is likely, if not inevitable, that they will take those same theories and apply them to other parts of the Internet. Other places where we're talking to each other will be put under the same legal microscope that the social media defendants are facing now.

23:21And that's why I view the stakes of the case so highly, because not only is social media on trial, but implicitly the entire Internet is on trial. And I do worry that the plaintiffs, whether it's state AGs or school districts or individual victims, will learn the wrong lessons, which is that they can put editorial publishers under their thumb and force them to change how they publish content. If that's a lesson that we take away from those cases, we will all suffer the consequences. The Internet will look radically different. Eric, thanks so much. It's always great to have you on the show. That's Professor Eric Goldman of Santa Clara University Law School.

24:02Coming up next, Trump is confirming judges faster than in his first term. I'm June Grosso, and you're listening to Bloomberg.

24:1453 federal judges have been confirmed so far during President Trump's second term. That compares with 51 at the same point in his first term. The Republicans accelerated judicial confirmations this summer, moving more nominees in June and July than in the first five months of the year. But now they'll have limited time to process nominees after they return from recess. Joining me is an expert in the federal judiciary, Carl Tobias, a professor at the University of Richmond Law School. Carl, during Trump's first term, we talked about the backlog of judicial vacancies he inherited and how fast they were moving.

24:57How were they able to move even faster in the second term? Well, because they have been confirming him at a pretty quick pace, Grassley has been very aggressive about just setting the committee meetings and hearings and then moving them onto the floor with what he has. But at this point, there are hardly any left where there is a nominee who has not been through the process. OK, and so the holdup has been in the White House. And so that's what we're going to see. And then into the rest of the term, there just aren't that many vacancies that are going to be available because judges are not taking senior status.

25:49And so that's what you're seeing. Grassley and the Senate have done almost everything they could do. There are only a few people who have been waiting for their final votes right now. Do you know how many appointments there have been to the circuit courts? Yes, 10. 10 confirmed. And then there's one, the 10th Circuit nominee, Daniel Domenico, who is on the floor awaiting a vote. And that will happen when they return in September. And that would be it. There's another vacancy in the Fifth Circuit we've talked about with Anna St. John. She had a hearing, but she still will need a committee vote and a floor vote.

26:40And then Bobby Shepard from Arkansas on the Eighth Circuit has said publicly that he will assume senior status. And there's no nominee yet from the White House for his vacancy. So that's all you have on the appeals courts. Now, when they come back, are they going to have time to do anything? They'll have some three weeks in September. I believe they'll come back on the 14th. And they will be able to do some work then. And they may be able to get St. John through. And then there are a couple of district nominees. And they'll go through for Texas seats. And then the first day they're back for the Southern District of Ohio, Matthew Byrne will have a culture vote and then confirmation on that Tuesday.

27:30But that is it. And when those people have votes, then it really will be incumbent on the White House to have more nominees in front of them. But no one will be able to be confirmed except for Anna St. John. Those I just mentioned to you before they go out to campaign and then return after the midterms. Things are slowing down on that front. Grassley, though, has said that he will work to the bitter end, but he doesn't have much to work with. And so it's really incumbent on the White House to name more nominees, which they may do during this break. Right. And so that's possible. And then there will be a lame duck.

28:19And some things could happen there, too. Is there anyone in charge at the White House of judicial nominations like there was in the first administration? There are people that have been working on it. You know, there's just a brand new White House counsel announced. Warrington is leaving, going back, I think, to private practice. and Will Scharf, who mostly has been moving the paperwork for the president as the staff secretary, so he helps with executive orders and that type of thing, will become the new White House counsel. And of course, the Office of Policy Development in the Justice Department helps prepare nominees and may help with working with home state senators.