Takeaways
- A coalition of 33 states sued tech giant Meta Platforms on Tuesday, amid a growing backlash against big tech.
- The plaintiffs, including nine attorneys general who filed separate lawsuits, allege that the company's social media platforms harm children. and adolescents and is exacerbating a mental health crisis.
- Plaintiffs in this case claim that Meta uses psychologically manipulative and addictive features to keep young people engaged on social media platforms in order to maximize the company's advertising revenue.
- This is the latest major lawsuit against a major tech company, after the FTC and DOJ filed lawsuits last month against Amazon and Google, respectively.
A coalition of 33 states, as well as nine attorneys general (AG) who filed separate lawsuits, tech giant Meta Platforms (META) sued Tuesday, alleging that the company's social media platforms harm children and teens and exacerbate a national mental health crisis.
The plaintiffs allege that Meta, which operates Facebook and Instagram, targets children and teenagers with addictive and manipulative features to keep them engaged on its apps to maximize revenue and advertising profits.
To achieve this, the plaintiffs say, Meta uses psychologically manipulative features such as “likes”, pings, and other audiovisual and 'haptic' features. touch-activated alerts, plus an endless stream of posts to keep users engaged on the platform for as long as possible.
“The more time young users spend on Instagram and Facebook, the more Meta earns by selling targeted advertising to these users,” the plaintiffs wrote.
The state AGs also allege that Meta violated the Children's Online Privacy Protection Rule, or COPPA, which imposes certain requirements on online platforms that collect information from children under 13. . Among the damages sought, the state AGs hope to force Meta must change its practices and comply with COPPA, including obtaining parental consent before collecting and monetizing personal data.
With the exception of Maine, state AGs also seek monetary damages and other forms of compensation, including those from attorneys. fees and costs incurred by states and their attorneys general.
Meta shares lost about 0.5% on Tuesday, giving up gains from earlier in the session. Shares of the tech giant have more than doubled in 2023 and are among the best performers in the S&P 500 this year. This is a sharp reversal from last year, when Meta shares lost nearly two-thirds of their value in a bear market for technology stocks.
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Big Tech Companies face wave of lawsuits
Tuesday's lawsuit against Meta Platforms is the latest in a series of lawsuits filed by states, government agencies and regulators like the Federal Trade Commission (FTC) against large technology companies, which have gained influence and considerable influence on the market in recent years.
Last month, proceedings began in a lawsuit pitting the U.S. Department of Justice against Google (GOOGL), in what could become one of the largest antitrust trials in decades. Federal regulators say the tech giant has an illegal monopoly in the Internet search market, and a DOJ victory could significantly reduce Google's influence.
Also in September, the FTC and a coalition of 17 states sued Amazon (AMZN) for what the plaintiffs say are anticompetitive practices in the online retail market. If Amazon loses, the company could be forced to reduce some of these practices, which would give sellers on the Amazon platform more negotiating power.
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Source: investopedia.com
