Meta’s child safety settlement is a warning sign for AI companies | #childsafety | #kids | #chldern | #parents | #schoolsafey

Meta’s blockbuster settlement of up to $17 billion over allegations of child safety failures could influence the regulation of another tech product drawing regulator scrutiny: artificial intelligence chatbots.

Experts told the Chronicle that the tech giant’s landmark settlement could reverberate through AI litigation and regulation, in particular at the state level.

“It’s definitely a warning for the AI companies that they won’t be able to spend half a decade dragging out their response to criticisms about harmful design, and that even if federal legislation continues to move very slowly, the states are taking matters into their own hands,” said Jennifer King, privacy and data Policy fellow at Stanford University’s Institute for Human-Centered Artificial Intelligence.

The up to $17 billion settlement would be paid out over a decade and is only a small fraction of Meta’s earnings over that period, which included $18.3 billion in profit in the second quarter alone. Meta plans to spend around eighttimes the entire settlement amount on AI and other capital expenditures this year.

But the outcome is another blow on top of numerous other challenges, including dozens of additional lawsuits. Over 1,000 school districts sued Meta and other tech giants in a case scheduled to go to court next February.

Though the company remains highly profitable, Meta has continued mass layoffs as it makes a massive multibillion bet on AI infrastructure, straining its cash flow.

The federal government has not sued a chatbot company, but state cases are moving forward. Earlier this year, Florida’s attorney general sued OpenAI, with allegations including harm to minors. Pennsylvania officials separately sued chatbot company Character.AI over allegations of depicting bots as credentialed medical professionals. Both companies have disputed the claims.

“I do think the Meta settlement may affect how states think about AI chatbots and companion products, especially where minors are involved. Now that Meta is effectively committing to age verification as an effective option, I do think legislatures will take note,” said Jessica Nall, partner at law firm Withers, who focuses on technology litigation and has represented AI founders in government investigations and enforcement cases.

With many states already seeking to regulate AI, including for political reasons, the Meta outcome “will perhaps add even more fuel to that fire,” she said. Meta is also advocating that TikTok and Google’s YouTube reach similar agreements with officials.

“Plaintiffs in parallel AI cases will definitely point to the Meta settlement as part of a broader narrative that tech companies are able to and should put in age related and other safeguards,” she said.

The 1996 Communications Decency Act’s Section 230 shields tech companies like Meta from liability for content posted by third parties. But that protection “may not be as clear for AI companies,” said Nall.

But the Meta case’s impact is limited, Nall noted, because Meta is settling before any court ruling, and the company is not admitting any wrongdoing. “The First Amendment, Section 230, causation, or product-design questions at the heart of these cases all remain alive for appellate court review” in other lawsuits, Nall said.

“The settlement applies only to Facebook and Instagram, not to other Meta services. Even so, a state might take this settlement as a leading indicator of how to approach chatbots,” said Kate Ruane, director of the Free Expression Project at the Center for Democracy & Technology, a nonprofit digital rights advocacy group.

Separately, Meta lost a major child safety lawsuit in March in New Mexico, with a jury finding the company liable for misleading consumers about its product safety. The company was ordered to pay nearly $1 billion. Meta and YouTube also lost a different personal injury case centered on social media addiction. Meta said it would continue to fight the claims.

“There are definitely differences between chatbot platforms and social media — the safety issues from other users being the primary difference,” said King, of Stanford. “I suspect that this settlement makes it inevitable that companies will have to take fundamentally different approaches towards under-18 users, in terms of providing a different product experience as well as potentially age approximating or verifying them.”