Meta & YouTube Lawsuit: Will Social Media Finally Face Consequences?

A recent jury verdict against Meta and Google has reignited a long-running debate: are social media platforms simply hosting content, or are they designed in ways that can cause harm?

In this episode, Kelly and Sean break down the case, the broader legal context, and what it could mean for the advertising industry.

The ruling found that platform design—features like endless scroll and autoplay—played a role in addictive behavior and worsening mental health for a young user. It’s part of a growing wave of over 2,000 similar cases targeting how these platforms operate, not just the content they host.

But here’s the key question: will anything actually change?

Looking back over the past decade, both Meta and YouTube have faced repeated controversies—from data privacy issues to concerns about youth safety. Despite this, advertising spend has continued to grow. Sean shares data showing that across dozens of major scandals, platform revenue and ad spend not only held steady—they increased.

So why does advertising remain resilient?

The answer comes down to scale, targeting, and efficiency. These platforms still offer unmatched reach and performance, making them difficult for advertisers to replace.

That said, this moment may still be different. The volume of legal cases, combined with growing public scrutiny, suggests potential pressure ahead. Kelly and Sean outline two key indicators to watch:

• Monthly active users – Are audiences starting to pull back?
• Ad pricing (CPMs) – Are costs rising due to shifting demand or platform changes?

They also touch on how evolving AI-driven ad tools may impact pricing and performance, adding another layer to watch.

The episode closes with a simple takeaway: history suggests stability—but the scale of what’s happening now makes this worth monitoring closely.

Key Topics:

• The Meta & YouTube lawsuit explained
• Why this case focuses on platform design, not content
• The rise of addiction-related social media lawsuits
• What history tells us about scandals and ad spend
• Why advertisers continue to invest despite controversies
• The role of reach, targeting, and efficiency in platform dominance
• The “tobacco moment” comparison
• Two key indicators to watch: users and pricing
• How AI tools may impact ad costs and performance
• What could actually trigger change in the industry

Chapters:

00:00 Intro & spring break check-in
00:46 Meta & YouTube lawsuit overview
01:36 Platform design and addiction claims
03:00 Scale of legal cases and context
03:49 History of scandals in social media
06:28 What the data shows (no change in ad spend)
07:38 Why this moment feels different
08:38 Advertiser behavior explained
10:22 What to watch: users and CPMs
12:27 Final takeaways
13:08 Closing thoughts

If you’d like access to the benchmark report or want to suggest a topic for the next part of the programmatic series, reach out to press@guideline.ai.

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And if you’re listening on Apple Podcasts or Spotify, a quick rating or review helps more people discover the show.

Transcript

SPEAKER_00 0:04

You're listening to Media Monitor, where we break down what's happening in the media and the advertising industry and tell you what it actually means. Hey Sean, how's it going?

SPEAKER_01 0:17

Good, Kelly. How are you?

SPEAKER_00 0:19

I'm good. The week of spring break is upon us. So I'm glad I caught you. I feel like there's a lot, it's a lot of out-of-offices, a lot of finding care for your child because the spring breaks, they just keep getting longer.

SPEAKER_01 0:33

Yeah. And and also just happen at times when the working world does not stop. Summer, I feel like at least you could kind of like things get a little quieter, but like a random week in April or March uh really does doesn't do any good.

SPEAKER_00 0:45

Yeah, that that end of quarter spring break convergence is never good for anyone. But here we are doing what we do best. Business.

SPEAKER_01 0:55

Doing business, end of quarter.

SPEAKER_00 0:57

End of quarter. Well, so um Sean, I think we've got to talk about Meta and YouTube and what's been going on. Big deal. Yeah, I think we have to talk about that. So what I thought we would do today is I can just, for our listeners who aren't as close, I'll give them a little bit of background, bring them up to speed, and then we can talk about, you know, some solid, real mid takes.

SPEAKER_01 1:19

Just not even a hot take, just a nice mid meh, this could happen.

SPEAKER_00 1:24

Well, you know, I think you're you're pretty good at predicting things. So let's see how you do today.

SPEAKER_01 1:29

But let's see.

SPEAKER_00 1:30

I'll I'll dive in. So last week a jury delivered a verdict that I think could fundamentally, this is you know, me talking, I think could fundamentally change how we think about social media and she's responsible for the consequences of social media. So it's Meta and Google that were found liable. And um they're found liable for designing platforms that contributed to a young woman's addiction and worsening mental health. The jury awarded millions of dollars in damages and concluded that the companies didn't just host content, they actually engineered experiences meant to k keep kids hooked. So I think what's so significant here is that it's the legal theory behind it. They're not blaming the posts, it's targeting the platforms themselves and saying that the addictive nature of the features, like the endless scroll, the autoplay, is making the most vulnerable users, you know, falling into this like compulsive use and leading to depression and and serious issues. So I actually once read, or maybe I saw a movie on this, that the endless scroll was modeled after slot machines. That was kind of like the base, which which makes sense to me. So um I think we're hitting a different moment in time with this, not just this one case. There are thousands of cases that are. I was of just gonna say, I'm sure you know the exact stat.

SPEAKER_01 2:57

We're we'll just pretend we'll hedge like something over 2000. Uh yeah. We don't need to be that much of a nerd. But yeah, it's just it is a wild amount of like a mountain of legal cases that are piling up on this, on this very specific topic, right? Not even just like generically lawsuits against social media, but this specific topic around its addictive nature, about kind of problem for for teens and mental health, right? It's it's all roughly the same topic, which is fascinating.

SPEAKER_00 3:25

Yeah. And so this isn't the first time that these things have been brought up. So I thought maybe we would take a walk down memory lane memory lane and just kind of go through the the history of what has happened in the past and then, you know, why are we here? Why are we bringing this up? The impact on the advertising industry. Has there been any changes to the amount of ads that they can run? That's kind of what we want to focus on. And given that this feels a little different, maybe we'll talk about how do we think it's gonna impact us going forward. So turn the clock back, Sean. Tell us where this you know, where this started and what happened.

SPEAKER_01 4:08

Who is it, Tina Turner? If we could turn back time.

SPEAKER_00 4:11

Last week it was TLC.

SPEAKER_01 4:13

Yeah. I'm trying to, you know, you know what, maybe I'll have to we have to see if we could pull demographics and I'll try to be a better fit for our audience demographics. I might need to kind of pull it up a little bit and try to figure out something more more Gen Z appropriate. I'm a I'm a big Olivia Rodriguez stand, so maybe there's some time-based metaphor I could throw in there, some lyric.

SPEAKER_00 4:32

I thought you were gonna say Olivia Dean.

SPEAKER_01 4:33

She's no, not not as much. I'm more of a like that that nice like uh high school angst around your boyfriend really, really speaks to me as a man in my my 40s. So speaking of YouTube and meta, going back in time, I think neither of these companies are really not familiar with lawsuits, right? I think kind of uh basically since 2012, there's been roughly two to three lawsuits that have made kind of major scandal headlines every year for these companies, going back to 2012, right? If we think back to like Cambridge Analytica, right, that was a big one for Facebook. So collectively, these platforms have seen a lot of different kind of critiques, lawsuits, scandals pop up, um, you know, specifically on child harm related to kind of impacting children or at least folks under 18. Kind of collectively between these two platforms, there's been, let me see, one, two, three, about 10 major scandals that have happened since, you know, basically 2020 alone. So there, you know, both the commentary and kind of uh frequency that's coming up around um are these platforms the right fit for kids, right? keeps coming up. Um on a prior episode, we had talked around Australia just recently rolling out a ban on teens using um social media. And Australia is just kind of one of many within the last year. I think there's seven countries globally. So, you know, Australia, Malaysia, I think Spain maybe put something out there recently in terms of banning teens or under kids uh from using social media. So that there's this kind of momentum that's really honing in on is this the right product for a child to use? And I think that's kind of um a little newer, but the idea of these companies facing scandal and what that means for advertising has basically been a perpetual question going back to the mid-ods. But what's fascinating is like digging into the numbers is because I think the big question is like, okay, so what does this do for advertising, right? Do people leave the platform? And essentially did this whole analysis where we looked at both like that quarterly earnings view. So, like from a from a top-line revenue perspective, what happened at these companies? And then we also looked at our own data going back to historicals of 20, 2008. What happened to advertising spend? And basically the answer is nothing. Nothing happened. Nothing. So like nothing, nothing at all. In the quarter, following quarter, uh, basically universally, you know, Facebook 21% growth in terms of revenue, 22% growth in terms of ad spend on average across every single one of these scandals, right? And so we looked at for for meta alone, we looked at 30 total scandals. Uh, for YouTube, we analyzed 26 of them. And so between these two, when we look at kind of the earnings, right, for for YouTube, it's like 13% growth on earnings, 20% on ad spend uh post-these kind of scandals breaking. And again, those similar stats for for Meta. So I think there's this kind of tension that's going on between we hear a lot of advertisers saying, oh, we should boycott the platform, we should cut back ad spend, right? This is harmful here. And then we see the reality of when the results come up. And the answer is is at least at a high level, so far, between all of these scandals, nothing, nothing happens. Or at least something happens. People continue to spend.

SPEAKER_00 7:41

People continue to spend. Yeah, I mean, uh it does feel like this is different, but I mean, you just said 56 scandals and nothing changed. In fact, things continue to grow. So it's it's really interesting. I wonder, and I don't know, you've probably been seeing this in the press too. People are calling this like the tobacco moment.

SPEAKER_01 8:03

Yeah, that like that watershed exactly.

SPEAKER_00 8:06

So I guess um, you know, Benioff, uh Mark Benioff, CEO of Salesforce, is probably like, you know, giving himself a little pat on the back because he said it in 2018. He said that uh essentially he declared Facebook was the modern day equivalent of cigarettes and that social media companies should be regulated as such. And here we are, people are bringing that up. But I'm sure, you know, back in the the early days of cigarettes, people knew they were bad, but people kept on puffing away, right? It wasn't until regulations were required, you know, like there was there was a change that things actually started to change. So I'm you know, I'm curious where this is gonna go. What what are your thoughts?

SPEAKER_01 8:54

Yeah, um it's something that I wrestle with too, right? Because it's like you can make a call and say, like, this is gonna be it and kind of follow the trend right now where a lot of put folks are making that call. Um, or you could look at these, you know, 50 plus scandals and go, most of the time these calls happened the last times and nothing happened. So it was like, which of these is the right call? Here's what I would say, using a little bit of a well, actually, data nerd kind of thing, is if I look at the data, there's two things that are gonna kind of tell me pretty quick what's going on. Is one, what's happening with the customers themselves, the consumers of the platforms. If we start to see monthly active users start to plateau, maybe dip, that to me is the first kind of watershed moment that says, yeah, this is gonna materially impact ad spend. The second is price. I think these platforms are in some ways almost addictive to advertisers as well, because you have so much going for advertisers. These platforms reach billions of people. You can kind of find them anywhere in the world almost instantaneously. There's incredible targeting out of the box. There's incredible tools out of the box that, like, if this is your first ad campaign or your 50th or thousandth, all of the tools work really well on delivering the ads to who you want, where you want. And at uh pretty bargain-level CPMs where it's really hard to say no to I could optimize my platform, I can get my reach and frequency, and I could do it at a fraction of the cost for an advertiser that's really addictive, right? And that's I think why we see the ad spend keep going where we go, is it's hard to kind of cut that out of your plan and figure out where you're gonna make that up at a price point that's that's effective, right? I think that that's the tough.

SPEAKER_00 10:39

So when you say you're gonna watch price, are you saying you're gonna watch CPMs? And if they creep up, that's potentially suggesting fewer people are in investing. This is the old supply and demand.

SPEAKER_01 10:52

Old supply and demand. I'm not gonna make another TLC reference that's done and done and gone. But the short answer is yeah, right. Like if we start to see social CPMs you know going more into like$8,$9 uh for like display or carousel on Instagrams, uh Instagram's uh the Instagram, Instagram I think it was GovEdit last week. Yeah, to be fair though, that does match with my TLC references. It fits. It fits. So I think like that's where where I'm paying close attention to is like the monthly active users, we can kind of track that, right? We know that like Facebook has kind of like plateaued off, but let's see what happens with Instagram. But for me, the real tell is gonna be uh price. And you know, what we've been hearing in market, what I've been seeing, what I've been reading, what I've been talking to clients is there's also this kind of split that's happening on a lot of these new like AI optimization tools, where like the tools for optimization on these platforms before the rollout of AI were already really pretty good. And so for a lot of um big brands, big agencies at the top line, right, they've already done enough to optimize. The AI isn't really giving them more juice for their squeeze. And so, but it is adding cost per acquisition. It is adding to their CPMs. And so there's a bit of a hesitation to roll into these platforms. So I'm curious to see like if this continues, right? We might see natural price creep up based on just the cost of running campaigns, the actual cost to run the ads themselves. Um and if users start to kind of fall off, right, you got to get that revenue somehow. So you might kind of juice up either the cost of the ads, maybe introduce more ads, right? There's this whole mix of things that like if you want to keep that revenue train growing, there's only so many levers you can pull. Um, so I could I could see a scenario in another couple months where price starts to meaningfully go up, we start to observe it. And then that that might be coupled with over 2,000 lawsuits, a material change for these companies.

SPEAKER_00 12:43

I think those are good indicators to watch. Monthly active users, price makes sense. So I think what you're saying is based on history, we don't know that there's going to be any change here, but the volume of cases is warrants us to keep closer tabs, and the way to do it is through monthly active users and that that CPM. So I think that makes sense. I think we have our our plan, our playbook here. And that was a really good summary, Sean.

SPEAKER_01 13:12

Yeah, I think uh I think uh well, thank you, first off. And I think maybe, you know, given the week and the the headlines going into spring break, spring break happening, maybe it's a a good place to stop for this week and do kind of a shorter one for us.

SPEAKER_00 13:24

And I'll just say, you know what? Long weekend, put your phones down, get outside. Maybe it's springish where you are and feel good.

SPEAKER_01 13:33

Yeah, well, lovely connecting. We'll talk soon.

SPEAKER_00 13:35

Thanks, John.

SPEAKER_01 13:39

That's Media Monitor. Follow us and subscribe wherever you get your podcasts every Wednesday for a new episode. And as always, thanks for listening.