Big Tech Has A 'Big Tobacco Moment'

A pair of courtroom losses this week has dealt a significant blow to Meta and YouTube, raising new questions about legal accountability for social media platforms and their impact on users.

In a landmark decision in Los Angeles, a jury found that Meta and YouTube harmed a young user’s mental health, while a separate ruling in New Mexico also went against Meta. Together, the cases mark a turning point after years in which tech giants largely fended off regulatory and legal challenges.

Legal experts say the decisions could signal a broader shift. Some are comparing the moment to the reckoning faced by the tobacco industry, when courts forced sweeping and costly changes after finding products to be addictive and harmful. NYU law professor Catherine Sharkey said the rulings reflect a “new era” requiring updated definitions of responsibility in digital products, with potentially far-reaching implications. Attorney Jessica Nall added that the decisions could open the door to similar cases across the tech sector, including artificial intelligence.

Both Meta and Google, which owns YouTube, said they plan to appeal and are expected to resist any mandates to significantly redesign their platforms or algorithms.

Despite the legal setbacks, investor reaction has been muted. Shares of Meta, Google, and other social media companies dipped only slightly in premarket trading, suggesting markets are not yet anticipating major financial fallout.

The penalties so far remain relatively small compared to the companies’ scale, including about $6 million in damages in the California case and a $375 million ruling against Meta in New Mexico—figures that represent a fraction of their overall profits.