Written by Frode Skar, Finance Journalist.
Facebook in court could reshape the economics of social media
Facebook in court puts the social media business model under scrutiny
Are social media platforms harmful to children? That is the central question as Meta CEO Mark Zuckerberg testifies in a major court case in California. The outcome could have far-reaching financial and regulatory consequences for the entire technology sector.
Hundreds of families across the United States have filed lawsuits arguing that platforms such as Facebook, Instagram and YouTube contributed to addiction, mental health struggles and in some cases severe harm among minors.
For investors, regulators and policymakers, the case is not only about ethics. It is about liability, product design, advertising models and long-term earnings risk.
Zuckerberg on the stand
In court, Zuckerberg reiterated that Facebook and Instagram do not allow children under 13 to use their platforms. He acknowledged that age verification on Instagram had previously been insufficient but argued that the company has since strengthened its controls.
He also rejected claims that Instagram is designed to maximize screen time. However, he admitted that Meta previously had internal goals to increase the time users spend on its apps, though he said the company has shifted direction.
That distinction is critical. If the court determines that platform design choices actively encouraged addictive behavior among minors, it could establish a new standard of accountability for digital product architecture.
Lawsuits from hundreds of families
One 20 year old woman claims in the ongoing case that she developed a social media addiction as a child, which allegedly worsened depression and suicidal thoughts.
Attorney Mark Lanier argued in court that the case concerns two of the world’s richest companies engineering addictive systems in children’s brains.
Meta and Google deny the allegations and state that they provide safety tools and parental controls.
TikTok and Snap were originally part of the broader litigation but have since reached settlements with families.
The business model under pressure
Critics argue that social media platforms operate within an attention economy where user data is analyzed to personalize content and maximize engagement.
A recent report cited in the proceedings indicates that Meta identified children aged 10 to 12 as a strategically important audience segment.
Meta has responded that teenagers today see less sensitive content and spend less time on its platforms compared with previous years.
Privacy regulators have emphasized that large scale data collection remains one of the biggest digital governance challenges of our time. If courts conclude that algorithmic design choices contribute to harm among minors, companies may be held financially responsible not just for content but for structural platform decisions.
Potential financial impact
A ruling against Meta could lead to several outcomes:
Multi billion dollar fines
Mandatory product redesign
Stricter age verification requirements
Limits on data collection
Pressure on advertising revenue models
Meta, Snap and Google rely heavily on targeted advertising driven by behavioral data. If regulators impose tighter restrictions, operating margins could narrow.
Such changes may also affect valuations across the broader technology sector as investors reassess long term regulatory risk.
Parallels with tobacco regulation
Observers have drawn comparisons to the tobacco industry’s regulatory turning point in the 1990s. Initially framed as individual responsibility, the debate eventually shifted toward structural accountability and public health regulation.
Some analysts argue that social media platforms now face a similar inflection point.
If courts conclude that the business model systematically harms minors, legislative and regulatory reform could accelerate.
Global implications beyond the United States
Although the case is unfolding in California, the implications extend internationally.
Technology companies operate global platforms with largely standardized design frameworks. Changes mandated in the United States could be rolled out worldwide to mitigate legal exposure.
Several European governments have already explored stricter oversight of social media platforms, particularly regarding child safety and data protection.
For users in Europe and elsewhere, a court ruling could translate into stronger age verification systems, modified recommendation algorithms and reduced data tracking.
More than a legal dispute
The case against Meta and Google is about more than individual claims. It challenges the economic foundation of the digital attention model that has dominated the past two decades.
The verdict could redefine the balance of power between users and technology companies.
A single ruling may carry significant weight.
