Meta's teen curfew narrows the window influencer contracts were priced against

Meta agreed to an $18 billion settlement to resolve claims that it designed Instagram and Facebook to addict children, misled the public about the dangers of its platforms, and illegally collected, retained and used children's data.

According to Meta's blog post, the settlement payment will be distributed in annual instalments over 10 years, with participating states receiving 70% of the allocated payment, approximately $12.7 billion, to fund online safety initiatives for children.

Meta will pay the remaining 30%, approximately $5.3 billion, only if YouTube and TikTok implement similar protections and controls to those Meta agreed to, and each pay an amount matching the 30% figure.

The Guardian reports the settled lawsuit was brought by 29 US states, which argued Meta had designed addictive products that hooked young people, and that Meta agreed to pay $18bn and change certain features of its platform in the US.

The settlement mutes notifications from 8 a.m. to 3 p.m., referred to as "school mode".

The settlement gives teens access to a non-algorithmic, non-personalized feed option.

Meta still faces numerous other lawsuits from school districts and individuals, some of which are scheduled for trial in the coming months.

Meta's share price rose in the hours after the deal was announced, and CEO Mark Zuckerberg was not forced to testify.

The sum Meta is to pay is far less than the $200bn the states had sought or the up to $1.4tn Meta itself suggested in a court filing it might have to pay.

The settlement ends a bellwether federal trial in the US Northern District of California in Oakland, where California, Colorado, Kentucky and New Jersey were seeking roughly $200 billion over accusations that Meta harmed children.

The states filed their agreement with Meta in the Oakland court, where Judge Yvonne Gonzalez Rogers is expected to approve it.

The agreement mutes push notifications, except for direct messages and account-security or safety alerts, from 8 a.m. to 3 p.m. on school days.

Take-a-break prompts are now enabled by default and trigger after every 15 minutes; when the feature was opt-in, data scientist George Volichenko testified that just 0.165% of teens enabled it.

Meta will hide like counts for teens by default; evidence presented by the attorneys general alleged Meta estimated hiding like counts would reduce its advertising revenue by 1 percent and then declined to make the setting the default.

The two-hour time limit and the block on push notifications in the middle of the night will remain in place for only five years unless YouTube and TikTok adopt the same restrictions, and Meta has threatened to undo some of its safety features sooner if rivals are not punished on equal terms.

The limits Meta will put on its US platform are in large part similar to limits the UK and Australia have already achieved through regulation, and while the UK plans to ban under-16s from social media it may wish to ask Meta to impose the default two-hour daily limit for under-18s.

The settlement includes prompts after every 15 minutes of continuous screen time and prompts when total daily usage hits 60 minutes and 90 minutes.

Meta said it separately settled with Texas for about $1 billion over similar allegations.

The 70% state share of roughly $12.7bn, paid in annual instalments over ten years, averages about $1.27bn a year.

An $18bn settlement is about 9% of the roughly $200bn the states were seeking.

Brand-creator deals on social media are typically structured as flat fees, sometimes with a commission on tracked sales or conversions, and brands and creators consider follower count, average impressions per post and engagement rate when calculating the value of a deal.

Unlike traditional television advertising, which has decades of audience measurement data, influencer marketing on social media is a relatively young medium with limited standardized benchmarks.

Meta's settlement is unlikely to qualify as force majeure in most agreements, particularly in jurisdictions like California and New York where courts only grant excuses if the specific event is stated in the clause.

Opt-in adoption of 0.165% is about one teen in 600.

Frustration of purpose is a doctrine under which a contract can be discharged when an unforeseen event destroys the fundamental reason one party entered the agreement, and Forbes argues it may apply where a brand's entire purpose was to reach a teenage audience on Instagram.

Existing brand-creator deals were not written with the new restrictions in mind, and most brand-creator agreements were not drafted with platform-level disruption in mind.

Platformer's figure of up to $17.1bn plus the separate Texas settlement of about $1bn totals about $18.1bn, within rounding of the $18bn reported by Forbes and the Guardian.

On a school day, the hours in which a teen can both use the apps and receive a push notification are 6-8 a.m. and 3 p.m. to midnight, eleven hours in total, and the two-hour daily cap must be spent inside that window.