I’ve gotten requests for audio versions of my posts. Here’s a test version of today’s round-up. Let me know if you like it.
Lots of monopoly-related news, including a revolt against Trump from cattle ranchers, new evidence of record corporate profits, and the Trump administration actuallying dinging private equity giant KKR.
Before getting to that, I want to discuss the big story of the week, which is that Meta and 47 states settled a major case on alleged social media harm to children. I’ll get into the details, but what no one else seems to have noticed is that this deal basically sets up a Food and Drug Administration, for tech. And that’s a very important, even if the settlement itself is kind of lame.
Let’s dive in.
To understand how far we’ve come, it’s important to start with how beloved big tech was just a few years ago. I’ve written this story many times, so I’ll just note three items. First, in 2011, Occupy Wall Street encampments held memorials to billionaire Steve Jobs when he died. Second, in the 2010s, it was widely believed that Facebook and Twitter were bringing democracy to the Middle East in the “Arab Spring.” And third, in 2016, it was widely known that Hillary Clinton was going to select Facebook COO Sheryl Sandberg as her Treasury Secretary nominee, and Sandberg was whispered as a future Presidential candidate.
Over the past ten years, that has changed, with calls for reform rebuffed, yet ultimately becoming a louder and louder roar. The popularity that big tech had is a faded memory.
The public became skeptical starting in 2016, with leaks of tens of millions of Facebook user information from data broker firm Cambridge Analytica. In 2019-2020, the House Antitrust Subcommittee did a landmark investigation into big tech, recommending changes to antitrust law.
In 2020, the Trump Federal Trade Commission and states sued Meta for monopolization, alleging its acquisition of Instagram and WhatsApp was illegal. Congress considered antitrust and privacy legislation, as did states.
The biggest threat was in 2023, when Biden FTC Chair Lina Khan sought to reopen the Cambridge Analytica consent decree and ban Facebook from collecting data about young people, which would have reordered the company’s business model. Today, they are legislative battles over age-gating and addictive feeds, as well as surveillance pricing. There are private lawsuits for addiction, and schools suing. And there’s the local pushback against data centers.
But largely attempts at reform haven’t stopped these companies; Meta’s revenues went from $8.8 billion in 2016 to $59.9 billion in 2025.
In the states, most privacy legislation has been blocked by aggressive lobbying, campaign contributions, or judicial action. In the courts, the First Amendment, Section 230 of the Communications Decency Act, and the idea these are “high-tech” innovative firms, have often confused judges, conflating product design choices with speech. Last year, a skeptical liberal judge, James Boasberg, struck down the antitrust case against Meta; he simply thought the company made excellent products.
On a Federal level, in 2022, Senators Chuck Schumer and Mitch McConnell blocked attempts at antitrust changes. And the Khan threat to ban Meta’s tracking of kids ended when Trump won, and the new FTC decided to approach market power differently. Moreover, Trump has staked his administration’s economic strategy on boosting big AI companies such as Meta.
But the public is very angry, and politicians are responding, even if Trump isn’t. And that brings us to the current case.
In 2023, state attorneys general sued Meta, alleging the social media giant built technologies to “entice, engage, and ultimately ensnare youth and teens” and lied about the harms. There were dozens of supposed legal violations, including consumer fraud, deception, unfair competition, and violations of the Children’s Online Privacy Protection Act.
The gist of the complaint was that the company had a toxic incentive system. It sought to “maximize the time that young users spend on its Social Media Platforms,” because “more time young users spend on Instagram and Facebook, the more Meta earns by selling advertising targeted to those users.” So Meta “developed and refined a set of psychologically manipulative Platform features designed to maximize young users’ time spent on its Social Media Platforms,” and then lied about it.
Meta was fighting this case aggressively, citing the First Amendment and Section 230, but it decided to settle because two things happened last month. It lost two related cases, one against New Mexico on the harm it caused to children, and another in Los Angeles to a private litigant alleging the company addicted her as a child. Both were highly embarrassing losses, and had overcome the company’s legal defenses.
So the company decided to agree to product changes, which it previously resisted. I’ve spent the last day or so go over the settlement, and aside from the multi-billion dollar payouts to the states, it requires a host of product modifications to redress the harms that Meta has fostered towards teens. And I have come to something of an odd conclusion.
First, this settlement is historically important. Unlike the Cambridge Analytica nonsense or the corporate fines of banks from the financial crisis, this one is actually real. I’ll get into the details below, but that’s the takeaway.
Second, this settlement doesn’t touch the core problem with Meta, which is that it makes money from tracking and advertising. You can put whatever guardrails on usage you want, but if Meta makes money from kids using its platform, it will find ways of enticing kids to use its platform. So I don’t know what kind of impact it will really have.
The states also failed to demand some very obvious changes, like having Meta stop using mandatory arbitration agreements, which would have allowed users and partners to bring cases against other forms of deception or fraud.
There are two parts of this agreement. The first is the money. The states are guaranteed roughly $12 billion, and then if TikTok and YouTube also cut similar deals, that amount will go up to a little less than $18 billion (with Texas, which is technically not part of this group of states, getting $1 billion as well). The money will be used for broad-based public safety expenditures and litigation costs.
State AGs are bragging about the amount of money they got for their states, similar in some ways to their paltry egg price fixing settlement. These are elected officials who have to go to legislatures for their budgets, so the ability to bring back cash is meaningful. Also, if you want to get annoyed, based on my reading of this settlement, half of that is tax deductible for Meta, meaning the Federal government is effectively subsidizing a little less than $2 billion of what the company has to pay.
Still, what really matters is that this settlement imposes a real regulatory regime on Meta. And the goal is to go beyond just Meta, but to create an industry standard; the deal explicitly encourages TikTok, YouTube, and Snap to agree to the same terms as Meta. The deal lasts for either five years, or ten, if the others join in.
Bloomberg@business
Meta is intensifying its public pressure campaign on TikTok and YouTube, running full-page advertisements in top newspapers across the US demanding its rivals make comparable efforts to strengthen social media protections for teens.
bloomberg.com
Meta’s Newspaper Ad Blitz Ups Pressure on Social Media Rivals
8:10 PM · Aug 28, 2026 · 18.6K Views
4 Replies · 8 Reposts · 18 Likes
Here are some of the most important changes the company will have to make to Instagram, Facebook, and WhatsApp. These changes apply to teens using their services, and are intended to make the service less addictive and psychologically destructive.
No more “Like” counts on posts.
Two hour daily time limit on Meta services, with the exception of messaging and “longform” content.
No push notifications at night (“Night mode”) or during school hours (“School mode”).
No beauty filters.
“Productive pauses” every 15 minutes to notify teens they are engaging in excessive use, along with pauses at every 60 or 90 minutes.
An in-app tool for users to report harmful content, with a guaranteed decision within 6 hours in at least 90% of cases, plus an appeals process. Harmful content includes bullying and harassment, violence and incitement, nudity and sexual activity, child sexual exploitation, hate speech, and suicide and self-injury, as well as illegal, unwanted, or offensive content.
Parents will get a rundown of their kids activity on Meta, including time spent and adults they are talking to, and searches for suicide, self-harm, and eating disorders.
A recommendation to teens to choose non-personalized feeds.
More limits on “age inappropriate content,” which includes nudity, gambling, suicide, self-harm and eating disorders, illegal drug use, high-risk viral challenges and risky stunts.
There’s a bit more, but that’s the gist. The company can use a variety of commercially available age identification systems, or design its own. It has to be mostly accurate, but not entirely.
So how will it be overseen? Well, there will be a “state committee” of six representatives from attorneys general, with the operations of the committee paid for by Meta. That committee will, along with Meta, hire an independent auditor to oversee the implementation of the agreement. The auditor will get private data from Meta, and it will release private reports on a regular basis on how the agreement is working, with the public able to get public executive summaries. Ordinary people can’t enforce this agreement, but any participating state can bring disputes to the court if it argues that Meta isn’t upholding its part of the deal.
There’s a lot of controversy around this deal, including among teens, and the question of whether it will “work” requires a definition of what it means to “work.” I’m pretty sure this set of changes won’t have a massive impact on how teens use social media. Kids use a bunch of different services, if they end up running into limits on Meta, they’ll just go to TikTok or YouTube or Snap. If those services adopt these same restrictions, well, that’s still a lot of time on social media.
I can go into more specifics of why I’m skeptical this settlement will spark mass changes, but the main one is what I said up top, and what the states argued in their initial complaint. Meta makes money by addicting and tracking kids, and then advertising to them. Nothing in this settlement changes that business model. So there just isn’t a financial alignment between the health of teens, and the financial health of Meta. Meta is structurally incentivized to violate this agreement.
I find this dynamic especially galling because had this case gone to trial, the states were going to win. They had absolutely devastating internal documents showing that Meta was essentially a sex trafficker, and New Mexico had already won a billion dollars against the company in a similar case, as had a private plaintiff in Los Angeles. Wall Street analysts were speculating that the company would have to pay out something on the order of $100-150 billion, and that was the amount Meta itself listed as a risk factor to investors. Mark Zuckerberg was about to go on the stand.
And then, the states settled. And not for $150 billion, or $100 billion, but less than $18 billion over ten years. And they not only gave up on the claims they brought initially, but also folded in the outstanding Cambridge Analytica liabilities from 2018. So the fact that the states cut this deal, for far less than anticipated, and without going to trial and putting these people on the stand, is perhaps the single most disappointing aspect of the case. (It’s notable that New Mexico and Florida didn’t settle, and Florida is taking this case to court.)
Corporate leaders don’t change without being chastened, and I’m not convinced Mark Zuckerberg thinks he did anything wrong. Indeed, the day after the settlement, it came out that Meta is spending $10 billion a year just on Anthropic AI services to train its own AI models, which is five times what it will pay out to states for destroying the minds of tens of millions of young Americans.
All that said, I believe this settlement matters far beyond the specifics of what it put forward. The important question for companies in these kinds of settlements is rarely the specific requirements, but whether there is a cultural change inside the corporation itself. When Microsoft settled with the Department of Justice Antitrust Division in 2001, the company stayed in one piece, but there were lawyers crawling all over the engineering departments ensuring they didn’t engage in predatory activity anymore.
That change, more than anything, led to a situation where new companies didn’t get strangled in the crib by Microsoft product managers. At the meeting where the decision matrix included a predatory move, someone could argue against it on legal or reputational grounds. Sure, this move might generate profit, went the argument, or nix a rival, but do we really want to embarrass our CEO in the press? People at Microsoft became less aggressive. So the real question is whether there will be a cultural change inside Meta. Will this settlement empower internal stakeholders who want to stop predatory behavior? I guess we’ll see.
But there’s another more optimistic lens. I believe this new regulatory framework is just a preview of what is coming.
In 1978, Jimmy Carter, with a huge Democratic majority, prefaced the Reagan era, proffering deregulation, capital gains tax cuts, and hikes in military spending, even when he didn’t want them. These actions were often meek, and contradictory, but the sentiment of the American people couldn’t be ignored. At a state and local level, politicians were busy deregulating and moving towards a pro-corporate direction.
We’re at a similar inflection point, though in the opposite direction. Americans are fed up with dominant businesses preying on their kids, and that, more than anything else, is driving this new regulatory impulse. In many ways, Trump is like Jimmy Carter, a failed President who nonetheless changes statecraft to allow the next leader to really reorganize a governing structure. His approach, while friendly to capital, has certainly not been laissez-faire. He works with CEOs directly, imposing informal regulatory frameworks through threats and bribes. He likes monopolies, because it’s easier to regulate an industry by talking to one CEO than to deal with the messy administrative procedural complexity of a competitive industry.
This settlement points at a different approach than the Trump imperial one. It basically sets up a national regulator operated by state attorneys general over a major corporation. And that regulator will probably be formalized and modified at some point.
In 1982, for instance, Judge Harold Greene oversaw the break-up of AT&T, issuing and overseeing the consent decree. For the next fourteen years, whenever a telecom firm wanted to make a change to its business operations, its leaders had to go to Greene. He became known as the “father” of modern telecommunications, the single regulator in robes of American telephony. In 1996, Congress finally ended this situation. They passed the Telecom Act, modifying the regulatory framework he had established and putting it into the hands of regulators.
I think something similar will happen here. The state committee will eventually become a formal regulator.
Historian Bill Novack, in his article “The Myth of the Weak American State,” argues the traditional view of American governance as feeble vis-a-vis European strong states is wrong. In fact, that is not and never has been true. The 19th century was not an era of laissez-faire, and U.S. governance has always been powerful. It’s just that the U.S. model of governance is decentralized. It involves non-Federal actors, including private citizens, municipal officials, judges, and state-level enforcers, to vindicate their rights through law.
Here, we see Novack’s argument in action. Without Congress, without the administration, state attorneys general have actually imposed a regulatory regime on the trillion dollar social media industry. They swept aside all the silly arguments about the First Amendment as a shield for big tech, which have been rendered irrelevant.
And this regulatory approach is not a one-off. Some of the same state attorneys general are litigating against big media mergers, such as Paramount-Warner and NexStar-TEGNA. Apple is finally losing revenue in its app store because of new rules from an antitrust suit brought by Epic Games, and presided over by the same judge as this Meta case, Yvonne Gonzalez Rogers.
Most people in America wonder why the government isn’t acting to regulate our corporations. Here we have a situation, though, where governance is happening. It’s just not happening through Congress, at least not yet.
But there is little question at this point that we are in a new regulatory moment. Ultimately, the reason for this settlement isn’t that the states were led by savvy litigators. It’s that the public is angry, and politicians are responding to that anger. In a few months, there will be midterm elections, with a host of new and aggressive politicians entering office. Two years after that, we’ll see another set of newcomers. These people will look at new ways to govern. They’ll see Trump’s aggressive use of state power to coerce monopolies. They’ll also see this deal, and the regulatory framework, and that’ll be a model they can examine to either formalize in statute or modify. And not just around social media, but in other industrial sectors as well.
And now, the rest of the monopoly round-up. Some great stories, including a battle over beef prices and cattle ranchers, as Trump tries to prevent a full-scale revolt from an extremely loyal constituency group. Also, economic growth is high, but most of it seems to be going to profits. And RIP Dolly Parton, a fantastic businesswoman and entertainer.
