It is almost unprecedented for a company as big as Meta to be accused of outright addictive product design and then choosing to settle.

What's the case all about?

A majority of the United States filed a case against Meta for designing Facebook and Instagram in an addictive manner. The state attorney generals alleged that the company was aware about the harmful effect of its products and yet chose to proceed with them. The conduct was continuing in nature where the states sought a host of changes in the product design for young users along with monetary damages.

Why did Meta not contest?

The allegations levelled were too risky in nature. If the charges were proved correct, the company had to redesign the entire product playbook with possibility of an unknown fine. The company did play its bet in a New Mexico Court case but was slapped with a fine of $567mn. The scale of the alleged damage was unprecedented given the number of states involved and the best professional advice in such ambiguity was to settle.

What are the agreed terms?

The company has agreed to pay a sum of $18bn over a period of ten years to compensate for the harm caused. The social media company has set an unusual condition where 30% of the committed sum would only be released if its competitors, i.e. TikTok and YouTube, are also forced to make similar design changes as forced on Meta. It is not known how this could be implemented.

Some other concessions given by the company include a two-hour usage limit for young users and a midnight block on a daily basis. The students also won't be able to get notifications during school hours allowing them to concentrate and parents would be able to closely supervise the usage of such products. The company would also automatically turn off personalised feed and content autoplay for young users to get them off the hook.

There are some other qualitative changes which would require closer monitoring. For instance, the company has said that it will age-gate the usage, however it is not known how this will be done. The company has also said that it will make it easier for young users to report harmful content which remains to be seen how.

What are the implications of this case for digital governance?

A lot. It is almost unprecedented for a company as big as Meta to be accused of outright addictive product design and then choosing to settle. Mental health of young users is a mainstay for any government policy and one could expect a lot of follow up action across the globe. It is also interesting that this incident has taken place in the US which is known for minimal regulatory approach. The EU has already opened an investigation against the company on similar charges and it remains to be seen how the company responds.