Even a loss in the landmark youth-safety trial would do little to hurt Mark Zuckerberg's empire
Protesters outside the Meta trial in Oakland, Calif., hold a banner displaying the names of about 400 children they say died as result of social-media impacts.
Will Mark Zuckerberg's social-media behemoth Meta Platforms get whacked with a legal judgment equal to its entire $1.4 trillion stock-market value?
I sure hope so. If that happens, MarketWatch readers will be able to scoop up the stock at bargain levels.
I would be willing to bet good money that Meta would be able to shrug off any damages, even if they weren't thrown out on appeal. In a worst-case scenario, they would simply pass on the costs to consumers. But I seriously doubt we would get that far.
Never forget that we do not live in a democracy or even a constitutional republic, but a plutocracy. In practical terms, the U.S. is run by a few dozen people, including Zuckerberg himself and his fellow billionaire "tech bros." The idea that the political class would go against their patrons is farcical.
Technology giants, venture-capital firms and others in the network spend vast sums every election cycle on campaign donations, lobbying sinecures and "dark money" campaign spending. If you want to bet against them, good luck.
It's notable that the stock market seems unworried about the Meta trial. The company's stock (META) fell 4% on Tuesday, but technology stocks more broadly fell about 1.5%, and at these prices Meta is still being valued at $1.4 trillion. Apocalypse? Not now.
We have been here before. In 1998, the Big Tobacco companies were forced, finally, to sign an apparently devastating master settlement agreement with the states to pay for all the damage that their products had done to U.S. citizens.
The smart play on the day the agreement was signed was to go out and buy tobacco stocks as greedily as you could.
Since that day, FactSet data show that bellwether Philip Morris (now Altria (MO)) would have turned an initial $1,000 investment into $25,500 - an astonishing compound return of 12.3% a year. The equivalent figure for the S&P 500 index SPX was just $10,800, a return of just under 9% a year.
Or, to put it another way, investing in Big Tobacco on the day of the master settlement agreement would have ended up making you more than twice as much money as investing in the S&P 500 on the same day.
The agreement did not end the addiction to tobacco. It did not end the companies' business model. The costs ended up borne by smokers who paid much more for their cigarettes to finance the settlement payments, before many of them died from smoking cigarettes.
Meta put out a statement Tuesday denying all the claims made by the state attorneys general in their suit. It said the claims were "limited in scope and entirely unsubstantiated," and that the attorneys general offered "no evidence" that state residents had been harmed at all.
Meta simultaneously denied that Facebook and Instagram had harmed children or that it had deliberately targeted its services at children.
But if the services didn't harm children, then why claim you didn't target them?
And if Instagram isn't targeting the under-13s, the attorneys general ask, why are there accounts for "My Little Pony," "Paw Patrol," "Peppa Pig," "SpongeBob SquarePants" and the like?
It's long forgotten now, but for decades - decades - the Big Tobacco companies swore that their products were not harmful: That cigarettes did not cause cancer, they did not cause emphysema and they were not addictive. The companies also furiously denied they targeted children and teenagers, not even with characters such as "Joe Camel."
When these denials at last became untenable, they retreated to other lines of defense, such as libertarianism.
It doesn't matter what we think of these arguments. The company executives were simply doing their jobs.
Public corporations exist for one purpose: To maximize profits for their stockholders. That's it. Their executives are not paid to care about anyone's children, although in their free time they probably care about their own. (Which is why many of them don't want their own children on these social-media sites, just as the tobacco executives didn't want their own children smoking.)
I am constantly amazed by the number of people in our country who do not seem to understand the basics of capitalism. Can I suggest you read, or at least skim, Ayn Rand's "Atlas Shrugged"?
Meta, like the Big Tobacco companies, is not a charity or a public-service organization. Meta executives have denied that they did everything they could to make Facebook and Instagram addictive, or that they have tried to get consumers to spend as much time on the sites as possible.
Anyone who reads Max Fisher's outstanding book "The Chaos Machine" can make up their own mind.
When consumers moved from laptops and desktops to smartphones about 15 years ago, it produced a crisis in Silicon Valley. Executives and investors wondered: How could these companies keep growing advertising revenue on the new, much smaller screens? Eventually, the companies hit on the solution: Get the customers hooked. And nothing works better than content that connects with our lizard brains by stimulating raw, base emotions like lust, hate and rage. The formula worked. The negative mental-health impact of social media isn't a bug, it's a feature. And it's profitable.
You don't need to see the data about cyberbullying, isolation, doomscrolling and teen suicide rates to see what these platforms are doing to society. (Say what you like about Tesla $(TSLA)$ and SpaceX $(SPCX)$ honcho Elon Musk, but at least he destroyed Twitter.)
If you are expecting this Meta lawsuit to protect you or your children, dream on. The safest protection is to "just say no" to "social" media. Leave your "smart" phone in your kitchen drawer and carry a flip phone (they can cost as little as $50). And if you feel a need to "social network," you could do it the old-fashioned way - by talking to people on your phone or even, you know, meeting them.
As for Meta stock? Citizens living in the cheap seats cannot beat the plutocrats - but thanks to the stock market, we can join them. If this trial throws up a bargain, take it.
-Brett Arends
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