Meta founder and CEO Mark Zuckerberg took the stand Wednesday to defend his company’s practices in a landmark lawsuit that could determine whether social media companies can be held liable for alleged harm to children. But if the defendants lose, the fallout could extend far beyond social media.
The case centers on Meta and Google, with plaintiffs alleging that services like Instagram and YouTube are deliberately designed to keep users, especially children, engaged — a dynamic they say can lead to harmful mental health consequences, including addiction. The lawsuit is widely seen as a test case for about 1,500 similar lawsuits waiting in the wings. Meta and Google deny the allegations, with Zuckerberg testifying Wednesday that “I care about the well-being of teens and children who use our services.”
If Meta and Google lose this case, it could change the way people interact with their platforms. But the consequences may not end there: the outcome could also have consequences for other technology giants, as well as companies far beyond the technology sector.
More insurance claims for social media addiction?
For example, insurance companies could see an increase in digital or social media addiction treatment claims. For now, social media addiction is not recognized as an official disorder in the US Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, Text Revision (DSM-5-TR), the authoritative guide used to diagnose mental health problems. That makes specialist cover rare, although insurers will pay for underlying mental health conditions caused or exacerbated by social media, such as anxiety, depression or behavioral disorders.
Yet the DSM-5-TR is published by the American Psychiatric Association, which has warned that “excessive, compulsive, or out-of-control use of various types of technologies is a growing concern.” Industry experts say a legal victory for plaintiffs could accelerate this shift, making digital addiction a bigger factor for insurers and employers alike.
“I think depending on the outcome of this lawsuit, this could make the idea of digital addiction more credible,” said David Schweidel, marketing professor and chair of Business Technology at Emory University’s Goizueta Business School. “In an extreme scenario, social media could be labeled as the next Big Tobacco.”
Insurance companies declined to comment on the lawsuit and its implications, but some have already taken steps to protect their liability when it comes to social media customers. In 2024, Hartford Casualty and several other insurers filed suit in Delaware seeking declaratory relief that they were not legally obligated to cover Meta’s legal defense or any resulting settlements or damages in a consolidated California case alleging that social media platforms contribute to harmful behavior in children. (This case is still pending.)
And insurance companies may not be the only companies feeling the ripple effects. If the jury finds that programmed algorithms are not protected by Section 230, the federal law that shields social media companies from liability for content posted by their users, it could expose many tech companies outside the social media industry to new legal risks.
Streamers could feel the effects too
Streaming services that rely on autoplay to encourage binge-watching, or mobile games that lure players back with dopamine-triggering lock screen alerts, could also be on shakier legal footing. (The European Union has since opened a formal investigation into online retailer Shein, including an investigation into its “addictive design,” particularly gamified programs that reward shoppers with points and other incentives.)
Even smartphone makers could be forced to make changes, such as giving users more control over notifications. Other companies across the business spectrum could feel the impact as a growing number of people seek treatment for digital addiction.
“Employers may also be affected by the severity of the additional tax,” says Schweidel. “As the idea of treatment for digital addiction or social media addiction becomes more socially acceptable, people will take more time off work to get that treatment.”
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