Social shake-up as Meta faces a trifecta of bitter court cases
In less than 100 days Meta faces an antitrust break up, before more suits alleging it harms kids and teen girls, and defrauded shareholders...
In 2024 Google’s seemingly unstoppable 25-year tidal wave of growth smashed into the immovable rock of the law. Unthinkable, yet it happened.
The US Government’s all-conquering regulators are now turning their gaze on the next Big Tech monopoly Meta.
In 97 days, it will follow Google by being unceremoniously dragged before the courts for the first of three bombshell trials.
The implications are ground shaking: A demand it sells Instagram and WhatsApp. Allegations it sold teen addiction for profit. And $200 billion lies to shareholders.
The social trial of the century is listed to begin on Monday April 14, and if you thought the Google evidence was juicy, what ‘til you see what’s coming here...
But before we dive into the details, join me in welcoming new subs over the weekend from TikTok (you’ll be loving this), The United Nations, Warner Bros, Disney, CNN, BBC Studios, broadcaster NZME serving 3.6 million New Zealanders, Australian cable network Foxtel (just sold to DAZN who once kicked the tyres on my video AI start-up Oovvuu), StudioCanal, billion dollar Canadian TV and radio giant Corus, tech thought-leaders TedX, Polish news agency Media PPG, movie distributors Rialto behind hit Parasite, Australia’s largest media company Nine, Australia’s ARN radio network, Magnite, M&C Saatchi, Dortmund University in Germany, streaming agency Atonik in London (hey Nathalie), and the Canadian Association of Broadcasters, among others.
And the US Special Advance Technology Program, which works alongside DARPA, which played a critical role in creating the internet we live on today. Now that’s cool.
It thrills me to know that 4,000 of the most interesting, pivotal and creative people in the world choose to receive this newsletter and be a part of our community. ??
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The US Federal Trade Commission will open its case in less than 100 days.
It’s demanding a judge forces Meta to sell Instagram and WhatsApp to spark competition in social and ads.
It bears many hallmarks of the Google case, most notably that Meta bought its rivals to achieve its $1.6 trillion valuation.
The case will dig deep into the foundations of the company, reveal internal secrets and strategies, and show how it grew to dominance.
The outcome may shift the economics of the web, potentially redistribute $135 billion in ad spend, alter every media company P&L, and be felt by 3.3 billion Meta users.
Yet for a trial with massive implications, it’s getting little coverage. Why is that? Could news brands be too fearful, like they were with Google?
That’s why I’m following it in a dedicated channel, so bookmark this link.
At the heart of the FTC’s case is the allegation that Meta paid $20 billion for Instagram and WhatsApp to stop them becoming competitors.
The price was far more than their perceived value by the market at the time.
The evidence also shines light on internal emails that the powerful might prefer were kept in the dark.
Zuck probably regrets writing this now, for example.
And his oops soon after failed to placate the legislators.
There’ll be loads more as the FTC case gets closer, but for now, this precis of the evidence will keep you going.
An antitrust case against the undisputed heavyweight of social media is obviously huge, but it’s just the opening salvo in the multi-front legal assault Meta has ahead.
A second trial brought by more than 30 US states including California, New York, and Florida, hits close to my heart as a father-of-three.
It accuses Meta of fuelling a teen mental health crisis by making Instagram and Facebook addictive.
The allegations are horrendous, and the evidence will be uncomfortable for Zuck and his sidekicks, particularly Instagram chief Adam Mosseri.
The States have internal emails, whistleblower accounts, and hidden studies which they claim prove that Meta knew the harms but looked the other way.
If Meta loses, it will expose the world’s sixth most valuable company and its founders as heinous and cold-bloodedly willing to make children suffer for shareholder profits.
Despite this, Meta’s value grew faster than all the Big Tech companies last year as investors bought into its AI vision. So what if a few hundred kids killed themselves…
I’ve reported on this troubling trend in my mini-series Dollars Over Sense.
Friends were shocked when I told them over dinner in the shadows of The Remarkables in New Zealand over New Year.
They asked me how I thought Zuck would be remembered. “As an innovator who turned addiction into an ad model, then used his financial clout to sway elections and destroy the meaning of truth,” I said.
Because the allegations are truly chilling.
The 233-page indictment says Meta actively harmed children, especially teen girls, by intentionally addicting them to Instagram and Facebook. The suit claims:
领英推荐
The court papers include a quote from Napster creator and founding Facebook CEO Sean Parker saying:
“The thought process that went into building these applications, Facebook being the first of them… was all about: “How do we consume as much of your time and conscious attention as possible?”
That means that we need to sort of give you a little dopamine hit every once in a while, because someone liked or commented on a photo or a post or whatever.
And that’s going to get you to contribute more content and that’s going to get you more likes and comments.
It’s a social-validation feedback loop, exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology.
The inventors, creators - me, Mark (Zuckerberg), Kevin Systrom on Instagram, all of these people - understood this consciously. And we did it anyway.”
The Washington Post has called the case “the most significant effort by state enforcers to tackle the impact of social media on children’s mental health”.
Even America’s deeply divided politicians agree.
California Attorney General Rob Bonta said: “Our bipartisan investigation has arrived at a solemn conclusion: Meta has been harming our children and teens, cultivating addiction to boost corporate profits.”
The case will resurface the trove of internal docs exposed by Meta scientist turned whistleblower Frances Haugen which revealed Meta knew the harm it was causing.
Scoops in the Wall Street Journal set the car running. Exclusives in the New York Times about Instagram pursuing underage users put fuel in the tank. Suggestions Meta execs misled Congress over age-checking pressed the accelerator.
It’s going to be ugly.
And then there’s the third trial, this one about cash and privacy.
A group of shareholders are suing Meta over the Cambridge Analytica scandal, claiming it hid facts and misled them on privacy policies.
Meta has fought hard to keep this case out of the courts, but it has failed and lost all its appeals, so now it will go to trial.
Cast your mind back to March 2018, when The Guardian revealed data from tens of millions of Meta users was improperly harvested by a UK political consulting firm.
The shareholders say Facebook knew about it for two years but failed to tell the users affected or them despite having billions of dollars at stake.
When the scandal broke, and Facebook’s lax data protection policies were laid bare, hundreds of billions was wiped off Facebook’s value.
The FTC issued a $5 billion fine, which was 20x the largest penalty ever imposed worldwide for a consumer privacy violation.
It was the beginning of the steady and relentless collapse in public and regulatory trust in Meta.
Those angry shareholders now allege they are victims of securities fraud and want damages. As of writing, no date has been set for the trial.
If 2024 was the year Google got its dues, then ‘25 will be Meta’s year of reckoning.
Three trials.
One from the US Government targeting competition and designed to reshuffle the social deck and how tens of billions of dollars in ads are targeted and delivered.
Another from US states focused on improving child safety by burning a hole in Meta’s marketing heatshield to reveal its bitterly cruel business practices.
And a third from shareholders alleging Meta’s fast and loose attitude to privacy cost them billions.
Finally, this.
In a few weeks, my first documentary will be screened on Netflix. I risked my life to expose the notorious paedophile Gary Glitter and went to jail in Cuba for spying as a result.
Journalism often needs to be fearless to matter.
Meta has been preaching for years now that news doesn’t matter, and just makes people unhappy.
And the resounding silence from mainstream media to cover the Google trial shows a cancer at the heart of proper journalism.
But remember this…
Perhaps a reason that Meta is so aggressive towards news media is that it’s news media that keeps it honest.
Or put another way, it’s news media that exposes Big Tech’s rampant dishonesty so well that eventually politicians listen, and the courts follow.
That’s why it matters. And it’s why we do it. Happy New Year.
Commercial Strategy for Services & Tech - Champagne Aficionado
1 个月Hasn't seem to have affected Google at all so far. The outcome for Meta is probably going to be similar.