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The financial structure of the $18 billion settlement

The Meta settlement reached in the U.S. has turned child and teen safety into a new financial risk area for the social media industry. The deal, reached in the second week of the case in California, could be worth up to $18 billion, and attention is now shifting to TikTok, Alphabet’s YouTube and Snap.

A coalition of U.S. states argued that Meta, owner of Instagram and Facebook, misled the public about the harm its platforms caused to young users. California was among the co-lead states in the case, alongside New Jersey, Colorado and Kentucky.

The payment plan and changes for users under 18

Meta will pay 70% of the total settlement — about $12.7 billion — to the states over 10 years. The remaining $5.3 billion is tied to rival platforms adopting similar measures for users under 18.

  • A daily two-hour usage limit will be imposed, and only a parent can remove it.
  • Filters that create an extreme makeup or cosmetic surgery effect will be disabled.
  • Age-verification measures will be tightened.
  • Night mode will be enabled.

Why are TikTok, YouTube and Snap under more pressure?

California Attorney General Rob Bonta said the agreement sends a clear message to other companies and that it calls for a “sector-wide solution.” Bonta said the state has an active case against TikTok, is in contact with Snap and expects YouTube to be brought into the process as well.

Bonta, New York Attorney General Letitia James and 14 other state attorneys general filed a lawsuit against TikTok in 2024, alleging violations of consumer protection laws. The case argues that addictive features have increased the amount of time young users spend on the platform, and the case is still ongoing. CNBC’s request for comment was not answered by YouTube, TikTok or Snap.

What are the key market risks?

The settlement suggests that not only potential compensation, but also product design and oversight processes, will become more visible on company balance sheets. Earlier this year, Meta and YouTube lost a social media addiction case in Los Angeles; Meta was also ordered to pay more than $900 million in a separate child-safety case in New Mexico.

According to experts, for platforms that rely on the trust of parents, users and advertisers, reputational risk is now merging directly with financial risk. As a result, the industry’s biggest players are facing pressure to tighten teen-user policies and raise potential compliance costs before these issues reach the courtroom.

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