BREAKINGVIEWS-Social-media verdicts preview AI legal hazards

By Gabriel Rubin

WASHINGTON, March 26 (Reuters Breakingviews) - The model of seeking forgiveness rather than permission has served Silicon Valley well, but a chunky bill is coming due. A California jury just found Meta Platforms META.O and Alphabet’s GOOGL.O Google liable for harm their apps caused in a landmark ruling. Alongside another $375 million decision in New Mexico this week, the cases provide ammunition for some 2,400 similar lawsuits against social-media services. Big Tech may consider this just the cost of doing business, but cigarette and pesticide makers can attest to the long-term effects.

Comparisons between the allegedly harmful effects of addictive algorithmic doom-scrolling on children with other unhealthy products are gaining credibility. After years of litigation, four large tobacco companies eventually reached a $200 billion deal with 52 states and territories in 1998. A master settlement approaching anything close to that size would be existential. At $400 billion, after adjusting for inflation, the sum would equate to all of the operating profit that Meta alone has generated over the past decade.

Lengthy management distractions and legal fees also compound the problem. German giant Bayer BAYGn.DE, for one, has been battling tens of thousands of cancer-related cases over its Monsanto-owned RoundUp weed killer for more than a decade, with legal agreements approaching $20 billion.

For Meta and peers such as TikTok and Snapchat, the damaging fallout already has metastasized. A global movement to limit children’s access to social media has made significant gains, with a national ban in Australia and other countries considering one. U.S. school districts have increasingly imposed restrictions on phone usage during classtime as Congress keeps discussing legislation to safeguard younger social networkers.

At least the tech companies are already looking ahead to a promising growth area, something Big Tobacco lacked at the turn of the century. The danger is that they're stalling safeguards and promoting self-regulation in artificial intelligence, just as they have done with the likes of Instagram and YouTube. Heeding industry advocacy, President Donald Trump in the earliest days of his return to power rescinded Joe Biden's executive order setting guidelines for “responsible” machine-learning development.

The Trump administration also has pushed, unsuccessfully so far, to restrict state-level AI laws for a decade, as local legislatures consider new consumer and privacy protections. As scientific research exposes more and more harms, lawsuits will proliferate along with associated costs. The question now is whether the financial calculus has changed to make the upfront cost of advance consent more affordable than the hefty atonement bill.

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CONTEXT NEWS

A Los Angeles ​jury on March 25 found Meta Platforms and Alphabet’s Google negligent for designing social media platforms that are harmful to young people, in a $6 million verdict. The trial is meant to serve as a test case for thousands of similar lawsuits consolidated in California state courts.

Separately, a New Mexico jury on March 24 found that Meta violated the state's consumer protection law in a case that accused the company of misleading users about the safety of its Facebook, Instagram ​and WhatsApp services and of enabling child sexual exploitation on them. The jury ordered Meta to pay $375 million in civil penalties.