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Big Tech Faces a “Big Tobacco” Moment in Court · Connecting the Dots

• 0:00
  Today's tech news moves fast, but understanding
• 0:03
  it shouldn't be hard. That's why Snarfle Solutions
• 0:06
  Group brings you Connecting the Dots, where we
• 0:09
  break down what's happening in tech and why it
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  matters to you. Now, let's dive in with your
• 0:14
  hosts. Good morning, everyone. I'm Alex. And
• 0:17
  I'm Morgan. Welcome to Connecting the Dots, broadcasting
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  live from Snrful Solutions Group right here in
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  very sunny Sacramento, California. Very sunny.
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  It's gorgeous out today. It really is. Today
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  is Thursday, March 26th, 2026. And we are absolutely
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  thrilled to have you with us this morning. Yeah.
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  Thanks for tuning in. And before we get to our
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  main story, which, by the way, is a massive legal
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  earthquake that could literally force the entire
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  internet to redesign itself, we should probably
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  do a quick vibe check. Yeah, let's get you caught
• 0:49
  up on the Morningstar. That's our snarfl tech
• 0:51
  article report quick hits. So looking out the
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  window, like we said, beautiful day in the capital.
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  Definitely. Mostly sunny skies and a high of
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  about 78 degrees in Sacramento today. Perfect
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  weather. But if you're tuning in from the mid
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  Mississippi or the Ohio valleys, please, you
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  know, see weather aware today. Yeah, it's getting
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  rough out there. It is. There are severe thunderstorms
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  rolling through later this afternoon and evening,
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  which I can large hail damaging winds and even
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  a few possible tornadoes. So keep your alerts
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  on for sure. And out in the plains, they're dealing
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  with sort of the exact opposite problem. Record
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  warmth across the southern tier is creating some
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  really serious fire weather conditions today.
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  Right, so stay safe out there wherever you are.
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  Moving on to the markets. Well, it was a bit
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  of a red day across the board yesterday. Yeah,
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  a little sluggish. Just a bit. The Dow closed
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  at $46 ,210 .09, which is down about a quarter
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  of a percent. The S &P 500 closed at $6 ,538
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  .12, also down roughly a quarter percent. And
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  Bitcoin took a bit of a hit too, actually. It
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  closed down over two and a half percent at $69
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  ,372 .84. Not the best day for crypto. And finally,
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  for our local sports fans, it was kind of rough
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  outing for the SF Giants yesterday too. Oh man,
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  don't remind me. I know, I know. They dropped
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  their game against the New York Yankees 7 -0.
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  Ouch. Yeah. Max Fried took the win on the mound
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  for New York and Austin Wells had a pretty great
• 2:18
  day at the plate going two for three. But hey,
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  we'll get him next time. Fingers crossed. Now
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  if that Giants score or you know, the stock market
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  has you feeling a little sluggish this morning,
• 2:26
  I have exactly what you need. I think I know
• 2:28
  where this is going. You definitely know it.
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  Definitely check that out. Okay, let's get into
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  the core of today's show. Let's do it. The entire
• 3:19
  foundation of the modern internet is basically
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  built on keeping keeping our eyes glued to the
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  screen. Right, oh, 100%. Attention to the currency.
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  Exactly. But yesterday, a jury in Los Angeles
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  basically ruled that this very foundation might
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  be illegal. Yeah, we are watching the entire
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  legal framework of the internet being tested
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  in real time right now. It's wild. Our mission
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  today is to connect the dots on what two distinct
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  back -to -back trials mean for the future of
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  the internet. We're looking at how families navigate
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  online safety and, honestly, how tech businesses
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  are going to operate fundamentally from here
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  on out. So let's dive into what happened in LA
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  first. Yeah, lay it out for us. So yesterday,
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  a jury ordered Meta and Google, specifically
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  YouTube, in Google's case, to pay $6 million
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  to a 20 -year -old woman named Kaylee GM. And
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  how did that break down? It breaks down to $3
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  million in compensatory damages and $3 million
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  in punitive damages. The jury basically found
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  that these apps were negligently designed to
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  addict children. Wow. Yeah. And that this negligence
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  was a substantial factor in causing Kaylee's
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  severe depression and body dysmorphia. And they
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  actually split the liability between the companies,
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  right? Right. Which I found super interesting.
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  They did. And it's quite revealing about how
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  juries view different platforms right now. Meta
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  is on the hook for 70 % of that total. And YouTube
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  is 30%. Exactly. Now naturally, both companies
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  immediately stated they plan to appeal the decision.
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  Of course. I mean, they aren't just gonna roll
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  over. Right. Their core argument is that mental
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  health is profoundly complex. It's influenced
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  by genetics, family dynamics, childhood trauma,
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  all sorts of things. They're saying you can't
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  just point a finger at Instagram and say, that
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  caused it. Exactly. They argue you simply cannot
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  link a medical condition to a single app. And
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  Google also heavily leaned into the defense that
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  YouTube is a responsibly built streaming platform.
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  Not a social media site. Right. They really tried
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  to distance themselves from the social aspect
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  entirely. OK, but I want to talk about this one
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  specific moment in the courtroom because optics
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  of it were just incredible. Oh, the M &Ms. Yes,
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  the M &Ms. So, the plaintiff's attorney, Marc
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  Lanier, is arguing for punitive damages, right?
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  He wants the jury to really punish these trillion
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  -dollar companies. So he brings out a prop. He
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  brings out a giant glass jar filled with 415
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  Pina M &Ms. It's a brilliant piece of courtroom
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  theater, honestly. He used those 415 M &Ms to
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  represent Alphabets, which is Google's parent
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  company. They're $415 billion in stockholder
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  equity. So he stands there, looks right at the
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  jury, and says, what are you going to find them?
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  A billion dollars. And he plucks one single green
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  M &M out of the jar. Just one. Just one. Then
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  he says two billion, and he pulls out another
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  one. He visually demonstrates that finding these
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  companies one or two billion dollars is like
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  taking a single M &M from a family -sized pack.
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  The executives won't even notice it's missing.
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  Right. His exact quote to the jury was, you've
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  got to talk to Metta in Metta money. Which perfectly
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  highlights the sheer scale of the financial disparity
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  in these cases. I mean, a $6 million verdict
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  is literal pocket change for Metta and Google.
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  Yeah, they make that in, what, seconds? Exactly.
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  But the dollar amount isn't the point of this
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  trial at all. The point is the precedent. This
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  is the first time a jury has legally declared
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  these platforms to be defective products. OK,
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  wait. I really need to stop you there because
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  I am genuinely confused by this legal strategy.
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  How so? Well, for decades, tech companies have
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  had this impenetrable shield, right? Section
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  230 of the Communications Decency Act. Right,
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  the holy grail of tech law. Yeah. And the way
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  I've always understood it is that it's kind of
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  like the phone company. You can't sue AT &T if
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  two people use their phone lines to plan a bank
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  robbery. Because AT &T just provided the wire.
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  Exactly. Section 230 says tech companies just
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  provide the digital bulletin board so they aren't
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  liable for what users post on it. So how on earth
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  did this lawyer get around that massive legal
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  shield? That is exactly the crux of the issue.
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  You're completely right about Section 230. It
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  protects platforms from liability regarding user
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  -generated content. Right. If someone posts a
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  harmful video, the platform isn't legally responsible
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  for the video itself. But the plaintiffs in this
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  LA case completely bypassed the content. Oh.
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  Yeah, they didn't sue over the call being made
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  on the phone line. They sued over the engineering
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  of the phone itself. Ah, so they targeted the
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  architecture. Precisely. They argued that features
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  like the infinite scroll, auto playing videos,
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  and intermittent push notifications aren't just
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  your neutral tools. They have a purpose. Right.
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  They are intentionally designed to exploit human
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  psychology. Take the infinite scroll, for example.
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  Okay. In the physical world, when you read a
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  book or a magazine, you eventually hit the end
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  of a chapter or the bottom of page. Your brain
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  gets a natural satiation cue. A stopping point.
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  Exactly. A stopping point that says, okay, I'm
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  done here. Right. You have to physically turn
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  the page or close the book. It requires an active
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  choice to continue reading. Exactly. But the
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  infinite scroll removes that stopping cue entirely.
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  It continuously loads new content before you
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  even reach the bottom of the screen. It just
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  keeps going? It just keeps going, bypassing your
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  brain's natural impulse to move on to another
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  task. The plaintiffs argued that this isn't a
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  neutral bulletin board at all. It's an architecture
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  designed to chemically addict the user by dripping
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  dopamine. So going back to my analogy, It's not
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  that the phone company connected a call for bank
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  robbers. It's that the phone company engineered
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  the physical receiver to inject a highly addictive
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  substance into your ear every time you pick it
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  up. So you never hang up. Guaranteeing you never
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  hang up. That makes so much sense. That's exactly
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  it. And the specific analogy used in court was
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  the digital casino. Oh, like slot machines. Yes.
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  If you put a teenager in front of a slot machine
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  that is psychologically engineered by experts
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  to keep them pulling the lever, you don't blame
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  the teenager for getting addicted. And you don't
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  blame the pictures of the cherries on the screen
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  either. Right. You blame the casino for the design
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  of the machine. And when you look at the internal
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  documents they presented at trial, that casino
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  analogy really holds up. It's actually damning.
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  It really is. There is an internal memo showing
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  that 11 -year -olds were four times as likely
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  to keep coming back to Instagram compared to
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  competing apps, even though the Platform's minimum
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  age is supposedly 13. And another document literally
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  said, if we want to win big with teens, we must
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  bring them in as tweens. Win big with teens.
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  I mean, it strips away the whole defense that
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  these architectural choices were accidental or
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  just meant to improve user experience. It frames
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  the intent as predatory. And this legal strategy,
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  arguing negligent design rather than moderating
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  speech, it successfully circumvented Section
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  230. Because the jury wasn't judging the videos.
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  Right, they were judging the engineering. Now
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  if you think the psychological design is a problem,
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  wait until you hear what happens when the digital
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  safety nets completely fail. Yeah, this is where
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  it gets even heavier. This brings us to what
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  happened in New Mexico. Literally just 24 hours
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  prior to that LA verdict, we are moving from
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  addictive architecture to a catastrophic failure
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  of basic safety infrastructure. Right. So on
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  Tuesday, a jury in Santa Fe hit Meadow with a
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  massive $375 million penalty. And this wasn't
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  a private citizen suing like in LA. No, this
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  was the state attorney general, Raul Torres.
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  Exactly. The jury found Metta violated state
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  consumer protections by misleading parents about
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  how safe Instagram and Facebook were from child
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  predators. And the evidence they brought to court
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  was incredibly dark. The Attorney General's office
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  ran this undercover sting operation. They called
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  it Operation Metafile. Yeah. Police officers
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  created fake profiles posing as children on Facebook,
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  Instagram, and WhatsApp. And the results were
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  horrifying. The Attorney General testified that
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  the fake accounts were simply inundated. with
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  explicit images and targeted solicitations from
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  adult predators. It wasn't just a trickle. It
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  was absolute flood and it resulted in actual
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  real world arrests. But here's the part that
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  genuinely blew my mind. During the trial, defense
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  attorneys brought meta executives to the stand.
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  We're talking top level, right? We're talking
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  CEO Mark Zuckerberg and Instagram head Adam Mosseri
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  testifying under oath. And their defense essentially
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  boiled down to Because their user base is so
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  massive with billions of people, harms to children
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  like sexual exploitation are just inevitable.
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  I mean, that word inevitable, it really struck
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  a chord with the jury. It frames the harm as
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  just an unavoidable cost of doing business at
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  a global scale. I have to heavily push back on
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  that logic. Think about the auto industry for
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  a second. Statistically speaking, car accidents
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  are inevitable. There are millions of cars on
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  the road driven by humans who make mistakes.
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  Crashes are going to happen. But a car manufacturer
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  can't just throw up their hands in court and
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  say, well, accidents are inevitable, so we aren't
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  going to bother installing seatbelts, airbags,
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  or brakes. That would be absurd. Exactly. At
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  what point does throwing your hands up and crying
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  inevitability cross the line from a statistical
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  reality into gross negligence? Especially when
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  the digital seatbelts they claim to have installed
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  are totally failing. And that's exactly what
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  the New Mexico jury concluded. Because the state
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  proved it wasn't just inevitable bad actors.
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  Right. The state proved that Metta's safety infrastructure
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  was fundamentally broken. Law enforcement officials
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  testified that Metta relied entirely too much
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  on artificial intelligence to moderate the platforms
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  instead of hiring enough human moderators. Okay,
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  let's unpack how that actually works because
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  I think a lot of people hear AI moderation and
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  assume it's some super smart computer cleanly
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  sweeping the platform, right? Why did the cops
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  say it was failing so badly? Because the AI lacks
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  human context. Police testified that the algorithms
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  generated massive volumes of what they called
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  junk reports. Junk reports. Yeah. For example,
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  an AI might be trained to flag any image with
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  a certain percentage of exposed skin. Oh, I see
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  where this is going. So it ends up flagging thousands
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  of innocent photos of families at the beach while
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  completely missing a predator using coded text
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  language in a private chat. So it's basically
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  drowning the human reviewers in false positives.
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  Exactly. It was flagging so much irrelevant material
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  that the actual severe crimes, including child
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  sexual abuse materials, were getting completely
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  lost in the noise. Wow. The cops actually called
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  the reporting system useless, meaning real crimes
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  couldn't even be investigated properly because
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  law enforcement was buried under mountains of
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  AI generated junk data. So you have a platform
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  telling parents it's a safe environment while
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  simultaneously blinding law enforcement with
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  false alarms so the real predators slip through
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  the cracks. Yes. It's like having a home security
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  system that goes off every single time the wind
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  blows or you know a squirrel runs by the window.
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  Eventually you just start ignoring the alarm.
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  And that's exactly when the house actually gets
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  robbed. It is a completely defective safety infrastructure
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  which honestly connects directly to the massive
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  ripple effect we are seeing across the business
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  landscape right now. Yes, it really does. Legal
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  experts are calling these two verdicts the tech
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  industry's big tobacco moment. I love that comparison,
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  but let's break down why it matters to you, the
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  listener, right now. Let's do it. Back in the
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  1990s, tobacco companies faced an existential
• 14:51
  threat. For decades, they argued that smoking
• 14:53
  was a personal choice, that nicotine wasn't addictive,
• 14:56
  and that health issues were too complex to pin
• 14:59
  on cigarettes alone. Sound familiar? Very familiar.
• 15:02
  As we just discussed, Meta and Google literally
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  argued in court this week that social media addiction
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  isn't a recognized medical diagnosis and that
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  teen mental health is too complex to blame on
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  an app. But then, just like with big tobacco,
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  the internal documents leaked. And the public
• 15:20
  saw that the companies knew the risks. Right.
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  They engineered the addiction and they targeted
• 15:25
  kids anyway. The Los Angeles and New Mexico trials
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  are what the courts call bellwether cases. They're
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  the test balloons. Exactly. They're the test
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  balloons for thousands of similar, consolidated
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  lawsuits waiting in the wings from school districts,
• 15:40
  parents, and attorneys general nationwide. And
• 15:43
  here is where it becomes a true financial and
• 15:45
  existential crisis for Silicon Valley. Because
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  a lot of people might look at this and think,
• 15:49
  well, Med is worth over a trillion dollars. They
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  can just pay a few hundred million in fines here
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  and there as a cost of doing business and keep
• 15:56
  operating as normal. Right. Just brush it off.
• 15:59
  But because juries are now officially treating
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  these platforms as defective products, it changes
• 16:04
  everything about how these corporations are insured.
• 16:06
  Yes, let's talk about the recent Delaware court
• 16:09
  decision, because I feel like this flew completely
• 16:11
  under the radar for a lot of people, but it is
• 16:13
  massive. What happened there? So a Delaware court
• 16:17
  recently ruled that Metta's insurance companies
• 16:20
  are officially cleared. from having to cover
• 16:23
  the damages in these specific child harm lawsuits.
• 16:26
  Wait, I am genuinely confused here. I've owned
• 16:28
  business policies before. The entire point of
• 16:31
  commercial liability insurance is that it pays
• 16:34
  out when your company gets sued for messing up.
• 16:36
  Right. Why would a judge let an insurance company
• 16:38
  just walk away and leave Meta holding the bag
• 16:41
  for billions of dollars? It all comes down to
• 16:43
  the legal doctrine of intentionality versus negligence.
• 16:47
  Okay, unpack that for me. General liability insurance
• 16:50
  typically covers accidents or unintentional harms.
• 16:53
  It's essentially slip and fall insurance. Yeah.
• 16:55
  If you accidentally drop a hammer on someone's
• 16:57
  foot, your insurance pays out. Right, because
• 16:59
  it was an accident. But if you purposefully engineer
• 17:03
  a hammer to seek out and smash feet, that is
• 17:06
  intentional harm. Ah, and insurers don't cover
• 17:10
  intentional harm. Precisely. The plaintiffs in
• 17:13
  these cases are arguing and juries are agreeing
• 17:16
  that the algorithms, the infinite scroll, the
• 17:20
  beauty filters, they were intentionally designed
• 17:23
  to addict. It wasn't an accident? No, it wasn't
• 17:25
  a slip and fall. It was a precisely engineered
• 17:28
  trap door. And because of that intentional design,
• 17:32
  the insurers can legally void the policy. That
• 17:35
  is staggering. It leaves these tech behemoths
• 17:38
  financially exposed to billions of dollars in
• 17:41
  potential future payouts entirely out of pocket.
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  No safety net. If every state, every school district,
• 17:48
  and thousands of parents start winning these
• 17:50
  defective product lawsuits, even trillion dollar
• 17:54
  companies will eventually bleed out. But let's
• 17:56
  bring this back to you, the listener. Why should
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  you care if Mark Dunkerberg has to pay out of
• 18:00
  pocket? Because it completely alters the internet
• 18:02
  you use every day. Exactly. Let's say you run
• 18:05
  a small bakery and rely on hyper -targeted Facebook
• 18:07
  ads to get local customers. Or maybe you're a
• 18:09
  creator who makes a living on YouTube, or just
• 18:12
  someone who uses Instagram to keep up with their
• 18:14
  family. If these platforms are forced by the
• 18:16
  courts to physically change their architecture,
• 18:19
  to avoid lawsuits, meaning they have to remove
• 18:21
  the addictive algorithms, kill the infinite scroll,
• 18:25
  disable autoplay, and verify ages strictly what
• 18:28
  happens. Engagement metrics will absolutely plummet.
• 18:30
  people will spend minutes on the app instead
• 18:32
  of hours. And when engagement plummets, ad revenue
• 18:35
  plummets. The entire economic engine of the free
• 18:39
  internet is built on harvesting human attention.
• 18:42
  It's all about keeping your eyes on the screen.
• 18:44
  Right. So if the courts rule that the tools used
• 18:47
  to harvest that attention are illegal, defective
• 18:50
  products, the fundamental way we consume content,
• 18:53
  advertise, and run online businesses will be
• 18:55
  transformed overnight. We are looking at a forced
• 18:58
  redesign of the global internet. It is wild to
• 19:01
  think that a jury in Los Angeles and a jury in
• 19:04
  New Mexico might end up rewriting the code for
• 19:06
  the tools we all use every day. It really is.
• 19:09
  This isn't just a tech story. It is a profound
• 19:11
  cultural turning point. We are definitely going
• 19:13
  to keep tracking these appeals closely because
• 19:15
  the Supreme Court is almost certainly going to
• 19:17
  have to weigh in on this eventually. Well, without
• 19:20
  a doubt. Now before we wrap up today's show,
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  recommend checking them out. OK, let's bring
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  it all home. Let's do it. Today, we've watched
• 20:19
  the legal landscape shift violently under the
• 20:21
  feet of Silicon Valley. We explored how a jury
• 20:25
  in California ordered Meta and Google to pay
• 20:28
  $6 million for negligently designing platforms
• 20:30
  that addicted a young woman. And doing so by
• 20:33
  bypassing the legendary Section 230 shield by
• 20:36
  attacking the app's architecture rather than
• 20:38
  its content. Right, and we saw a New Mexico jury
• 20:41
  hit meta with a $375 million penalty for failing
• 20:46
  to protect children from predators. Which really
• 20:48
  exposed a dangerously broken AI moderation system
• 20:51
  that drowned law enforcement in junk data while
• 20:55
  firmly rejecting the defense that such harms
• 20:57
  are simply inevitable. Together these cases represent
• 21:00
  a massive big tobacco -style legal shift. Juries
• 21:04
  are officially penalizing Big Tech for addictive
• 21:06
  design and failed safety nets, treating these
• 21:09
  platforms as intentionally defective products.
• 21:11
  And with insurers, like those in Delaware, legally
• 21:14
  backing away, the financial threat to these companies
• 21:16
  is very, very real. Which leaves us with a lot
• 21:19
  to consider about the sustainability of the internet
• 21:21
  as we know it. It really does. And we want to
• 21:24
  leave you with a final, forward -looking thought
• 21:26
  to mull over today. Think about the apps on your
• 21:29
  phone right now. Just envision them. If the courts
• 21:32
  eventually force social media companies to strip
• 21:35
  away all the addictive features, the push notifications,
• 21:38
  the endless scrolling, the algorithmic feeds,
• 21:41
  basically the very things that drive their advertising
• 21:44
  revenue, what does the internet look like five
• 21:47
  years from now? That's a great question. Will
• 21:49
  the era of free social media end? Are we heading
• 21:53
  toward a future where small businesses can't
• 21:55
  afford ads, and everyday users have to pay, say,
• 21:59
  $15 a month subscriptions just to ensure a safe,
• 22:02
  chronological, non -manipulative experience online?
• 22:06
  It's a fascinating possibility. A total pivot
• 22:08
  from the attention economy to a subscription
• 22:10
  economy. Something to think about the next time
• 22:12
  you find yourself mindlessly scrolling? We're
• 22:14
  here to help at Snarfles, so reach out on our
• 22:16
  website if you have any more questions. That's
• 22:21
  a wrap on today's top stories. Remember, tech
• 22:24
  doesn't have to be complicated, and we're here
• 22:26
  to help connect the dots. If you've got questions
• 22:29
  or want to learn more, visit us at snarful .com.
• 22:33
  Thanks for listening, and we'll catch you next
• 22:35
  time.