Big tech sell alert as Google and Meta face massive legal setback

Big Tech giants Google (NASDAQ: GOOGL) – via its YouTube video streaming business – and Meta Platforms (NASDAQ: META) faced a significant legal setback on March 25 in a legal dispute that could, eventually, profoundly affect how social media operates.

Specifically, a jury in Los Angeles found the two big tech firms liable for causing harm to a young user due to allegedly designing their platforms to be highly addictive. 

Alphabet and Meta were, simultaneously, ordered to pay $6 million in punitive and compensatory damages and were described as having ‘acted with malice, oppression, or fraud.’

While the fines are, given the wealth of the technology blue-chips, trivial, the implications of the decision could have far-reaching consequences. 

Social media platforms have been, for well over a decade, accused – and sometimes confirmed – of acting in highly unsavory ways as part of their continuous efforts to maximize user engagement and the monetization of engagement. 

Thus, the Los Angeles jury’s decision could have opened the floodgates for numerous other ongoing, pending, or considered cases and might, ultimately, force operators of social media platforms to profoundly alter the way they operate.

Indeed, reports indicate that numerous parents of children also alleged to have been harmed by corporate practices reportedly celebrated when the decision was announced.

Elsewhere, the arguably landmark decision comes at a time when big tech platforms are facing increased scrutiny. Australia already implemented restrictions on social media use for minors, and France – and multiple other nations – are following closely.

Meta Platforms was also fined nearly $400 million for misleading users regarding child safety, and Elon Musk’s X found itself in hot water several months ago due to its artificial intelligence (AI) Grok generating images that many have concluded amount to child pornography.

Similarly, many observers were alarmed by the fact that X’s initial reaction to the backlash was to restrict the relevant function to paying customers only in what some described as a cynical way of profiting from a highly controversial practice.

Simultaneously, while the ongoing geopolitical pressures make determining the cause of any asset price move difficult, both Google and Meta stock appear to have already started reacting to the news.

After ending the March 25 session at $290.93, GOOGL shares are 1.28% down in the March 26 pre-market at $287.19.

Similarly, Meta stock stood at $594.89 on Wednesday afternoon but is down 1.77% to $284.38 in the extended session.

Although the impact so far is limited – especially in the context of the wider selloff that has been plaguing the technology sector in 2026 – the results could, over time, become catastrophic for shareholders, depending on how future cases resolve.

Is the Los Angeles jury decision about to end ‘enshittification’?

Interestingly, should the decision reached by the Los Angeles jury truly end up having a transformative impact, it might, inadvertently, lead to vast improvements in user experience.

Indeed, many of the practices platform owners implement to boost engagement, users’ time spent on the apps, and monetization simultaneously constitute what Cory Doctorow described as ‘enshittification.’

Along with being the American Dialect Society’s word of the year in 2023, ‘enshittification’ is a process by which technology giants first degrade experience for users to favor corporate clients before they flip the script in order to benefit their revenue and profits and, ultimately, maximize shareholder value.

Featured image via Shutterstock