Meta’s (META) shares dropped over 8% on Thursday, following a Los Angeles jury’s finding that the social media giant and YouTube owner Google (GOOG, GOOGL) failed to adequately safeguard young users on their platforms.
This pivotal lawsuit, centered on allegations that the companies intentionally engineered their applications to be addictive for young users despite knowing the risks, could set a precedent for numerous comparable legal actions brought by educational institutions, government bodies, and families against these corporations.
Other social media firms, including Reddit (RDDT) and Snap (SNAP), also saw their stock prices decline on Thursday due to the verdict, experiencing drops exceeding 10% and 11% respectively.
Alphabet, Google’s parent company, experienced a stock decrease of nearly 2%.
After the ruling, a Meta representative informed Yahoo Finance in a statement: “We respectfully disagree with the verdict and intend to appeal. Adolescent mental health is deeply intricate and cannot be attributed to one application. We will vigorously continue our defense, as each case varies, and we stand by our history of online teen protection.”
Google spokesperson José Castañeda released a statement asserting, “We disagree with the verdict and plan to appeal. This case misinterprets YouTube, which is a responsibly developed streaming platform, not a social media site.”
This Los Angeles case follows a separate ruling in New Mexico’s lawsuit against Meta, where the state accused the company of misleading its users about the safety of its products and putting children at risk.
The New Mexico jury found Meta responsible on March 24, mandating the company to pay $375 million in fines.
Meta is also confronting a separate lawsuit filed by state attorneys general in 2023, presenting arguments akin to those heard in the Los Angeles proceedings.
Contact Daniel Howley via email at [email protected]. Connect with him on Twitter @DanielHowley.
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