Source: The Conversation (Au and NZ)
Reading the details of tech giant Meta’s landmark US$18 billion (A$25 billion) settlement with US state attorneys-general brought an intense sense of déjà vu.
In the late 1990s, I worked on Nixon v Philip Morris, Australia’s class action against the major tobacco manufacturers. I was one of the most junior members of the team at Slater & Gordon Solicitors.
After thousands of hours of work, the team was devastated to lose because the judges found it did not establish that all claims arose out of the “same, similar or related circumstances”. Still, our work laid the ground for later legal victories for smoking-related cancer victims.
While decades separate the two cases, the defensive strategies used by the tobacco companies and by Meta are remarkably similar. They hid internal research that demonstrated harms and focused on maintaining access to young users.
In addition to the financial settlement, Meta agreed to certain design changes for teenage users. These include two-hour limits and night mode that blocks access.
But for Big Tech, this settlement is not a devastating defeat. It’s a strategic move that mirrors the playbook perfected by Big Tobacco 30 years ago: accept financial penalties and limited behavioural concessions – but preserve the right to keep selling the product.
Tobacco’s existential crisis
In the 1990s, tobacco companies faced a global existential legal crisis. In Australia, a string of cases sought to hold manufacturers liable for deceptive and misleading conduct.
In the United States, a 1998 agreement with the four largest tobacco companies settled dozens of state lawsuits brought to recover medical expenses related to smoking.
Like the Meta settlement, the 1998 deal terms also focused on children. The agreement prohibited advertising that targeted under 18s, as well advertising involving cartoons and outdoor, billboard and public transit advertising.
The problem with the agreement was the cigarette companies knew that it was the advertising aimed at adults that lured teenagers who wanted to appear grown up – not the cartoons. The settlement successfully protected their more effective strategies
aimed at youth markets.
In hindsight, the tobacco industry signed the deal because financial payouts preserved their core business model.
The settlement contained no admission of wrongdoing or addiction, left retail distribution intact, and allowed companies to keep selling cigarettes in supermarkets and convenience stores. The annual settlement payments became manageable operating costs that were passed directly on to consumers through modest price increases.
Our research for the Nixon case uncovered that what the tobacco industry resisted most was never financial penalties. They fought with multi-decade lobbying and huge legal teams who played dirty – even shredding evidence.
What they feared was market exclusion: total advertising bans, point-of-sale display prohibitions, and mandatory plain packaging.
This fear was well placed. When such laws were eventually passed, they broke the consumer pipeline, slashing smoking rates in Australia by around two-thirds.
The long-term decline in smoking has been a result of young people never taking up smoking, rather than people quitting. It shows the importance of cutting off access to the youth market.
Engineered addiction
Both the Meta settlement and the tobacco breakthrough cases turned on the unsealing of internal company research that showed addiction was part of the technology.
In tobacco, internal laboratory files revealed executives understood cancer risks and chemical addiction, while publicly denying them, as early as the mid-1950s.
In Meta’s case, leaked internal research revealed the company knew Instagram worsened body image for 32% of teenage girls and amplified suicidal ideation in 13.5% of UK teens. Yet executives at US congressional and Australian parliamentary hearings minimised the extent of the harm.
Unsealed internal industry documents exposed during landmark tobacco lawsuits – including the 1998 settlement agreement and the 2006 RICO racketeering judgment – revealed manipulation of nicotine chemistry and filter design to cultivate and sustain neurodevelopmental dependence in minors.
Similarly, lawyers have succeeded in revealing the engineering of addictive design in social media: autoplay videos, infinte scroll and constant notifications designed to trigger dopamine spikes in developing adolescent brains.
Minimal commercial pain
Against Meta’s balance sheet, the US$18 billion settlement has been criticised for being minimal enough to be a “rounding error”. Meta generated US$201 billion in revenue in 2025. By my calculation, spread over a decade, its annual settlement instalment of roughly US$1.2 billion represents just two to three days of global trading revenue.
More importantly, they keep the teens.
This highlights the profound divergence between the American settlement model and Australia’s regulatory approach to social media.
The Australian government’s social media ban for under 16s followed years of pushback from the global tech giants. Then Communications Minister Paul Fletcher said in 2021:
Every time we’ve sought to do this, there’s been strong resistance from these global digital giants. They don’t like the idea of being subject to regulation.
While it is not perfect, Australia’s model aims to eliminate the acquisition funnel for under-16s entirely.
For platforms of Meta’s scale, financial penalties and compliance overlays are an affordable cost of doing business, and no doubt far preferable for Big Tech than laws that truly threaten the addiction model.
Read more:
Meta settles landmark US lawsuit for nearly $18bn and agrees to change Facebook and Instagram
Shelley Marshall receives funding from the Australian Research Council.
Original source: https://analysis1.mil-osi.com/2026/09/03/metas-18b-settlement-echoes-past-tobacco-lawsuits-and-how-they-avoided-harsh-penalties/