‘Big Tobacco Moment’: How Two Court Verdicts Could Change the Value of Every Social Media Stock

A phrase that keeps coming up in the coverage of two historic court decisions made last week—one in Los Angeles and one in Albuquerque—doesn’t come from a journalist or an academic. It originated with a senator. Sen. Ed Markey, a Democrat, said, “Big Tech’s Big Tobacco moment has arrived,” following a Los Angeles jury’s verdict that Meta and Google were responsible for creating platforms that caused addiction in young users and harmed their mental health.

The comparison isn’t meant to be dramatic. It’s a very purposeful historical allusion, and anyone interested in markets or courtrooms ought to take a moment to consider it.

The legal collapse of the tobacco industry took time. The courts developed a theory of liability through accumulation—one case, then another, and finally a flood of them. The existence of cigarettes was not the theory.

The reason for this was that tobacco companies were aware that cigarettes were killing people, but they kept this information to themselves while creating more addictive products. Observing these social media trials from the outside reveals how closely that framing resembles the arguments plaintiffs are now successfully making in front of juries.

The plaintiff in the Los Angeles trial, identified only as Kaley (her last name was withheld because she was a minor at the time the case was filed), testified that she began watching YouTube at the age of six. She was on Instagram by nine. By the time she was a teenager, social media had taken over her days and nights, keeping her up late, destroying her friendships, and feeding a skewed perception of her own body that she was unable to change despite her best efforts.

Mark Lanier, her lawyer, claimed that Instagram’s beauty filters repeatedly and algorithmically informed her that she wasn’t attractive or thin enough. Even when she wanted to stop scrolling, she was unable to do so. “Every single day I was on it, all day long,” she said in her February testimony. “I just can’t be without it.”

One of the nation’s most renowned mass tort lawyers, Lanier, who has 42 years of experience and later told reporters that this was the longest jury deliberation he had ever seen, contended that YouTube acted as Kaley’s gateway, forming neural pathways that made her vulnerable to the compulsive patterns Instagram later deepened.

Ten distinct notes with questions regarding the evidence and testimony were sent to the judge by the jury, which deliberated for eight days with exceptional care. A jury rushing to punish a tech company out of cultural resentment is not implied by such deliberateness. It implies that people are actually grappling with a difficult and significant issue.

In the meantime, a different jury in New Mexico reached a $375 million verdict against Meta for facilitating child sexual exploitation on Facebook, Instagram, and WhatsApp in less than a day. By all accounts, it was a historic occasion—the first time a jury had ever found a social media company accountable for injuring minors. Attorney General Raúl Torrez of New Mexico was uncharacteristically straightforward: he claimed that Meta executives knew their products hurt children, disregarded employee warnings, and misled the public about their knowledge. That isn’t an argument about a design flaw. That argument is a cover-up. Additionally, juries have historically reacted negatively to cover-ups.

The question of what theory of liability both rulings are based on is what makes them especially unsettling for investors and the legal teams at Meta, Google, Snap, and TikTok. These businesses have been operating under Section 230, a federal law that exempts platforms from liability for user-posted content, for many years. That shield is not directly attacked by the new cases.

They avoid it. What users post is not at issue. Infinite scroll, algorithmic recommendation engines, notification systems, and beauty filters are just a few examples of how the platforms are constructed. Put another way, product design. Furthermore, product design was never intended to be covered by Section 230.

The fissure in the wall is that. Both Meta and Google have stated they will file an appeal, and it’s still narrow. However, J.B. Branch, AI Governance and Technology Policy Counsel at Public Citizen, pointed out that Section 230 was drafted in the early days of the internet, when legislators were attempting to allow nascent online businesses to try new things.

He contended that it was never meant to provide some of the world’s most powerful corporations with long-term protection. In previously unreachable areas, that framing is becoming more popular.

The verdict comes after years of being told the law could not assist the parents who crowded the Los Angeles courtroom, many of whom have blamed social media for their children’s deaths. The CEO of the child safety advocacy organization Heat Initiative, Sarah Gardner, referred to it as social media’s Big Tobacco moment—exactly what others had been hesitant to say. It is not a metaphor. A moment of change.

These conclusions could be overturned by the appeals courts. The thousands of unresolved cases may result in a worldwide settlement that is difficult but manageable for the participating businesses. It’s more difficult to believe that nothing changes after two juries in two different states came to two similar verdicts within days of one another. Following their initial losses, the tobacco companies also said the same thing.