Is big tech facing its big tobacco moment?

“Fines placed on social media firms for harming customers are increasing. But they are not yet large enough to change behaviour. Rukaiyat Adebusola Yusuf compares tech to tobacco and argues that if litigation, regulation and public pressure converge to make harmful design unprofitable then this period may be remembered as when digital governance began to catch up with digital power. Recent jury verdicts against social media companies in America have pushed the governance of digital platforms to a critical point. A landmark case in California found that the design features of Instagram, which is owned by Meta, and YouTube, which is owned by Google, contributed to a young girl’s anxiety, depression and body‑image problems. The features highlighted included infinite scroll, autoplay and algorithmic recommendations. That verdict was followed by a separate decision in New Mexico , where a jury found Meta liable for misleading consumers and endangering children. The girl in the California case began using YouTube when she was just six and Instagram at nine. The debate about social media and children , which was once framed as a debate about “ screen time” or “online safety” has now become a question of product design, corporate accountability and public health . Courts in America have begun to treat social media platforms not as neutral tools, but as products whose design can cause foreseeable harm – especially to children and young people. Public patience with digital harm appears to be wearing thin, and questions about who pays for that harm are moving to the centre of policy and legal debates. This shift is visible not only in high‑profile jury verdicts against social media companies in America, but also in growing political pressure for stricter age‑based controls. In Britain, 23 bereaved parents wrote to MPs pressing for legislation, following Australia’s reforms in December 2025 to prohibit children under the age of 16 from social media sites such as Instagram, YouTube and TikTok. Countries such as Malaysia and Spain now have bans in place for under 15s with more countries considering similar measures. Recent rulings have been described as social media’s “ big tobacco moment ”. The comparison is deliberate. Tobacco companies were eventually held liable in America, first through state settlements in 1998 and later through a landmark federal judgment in 2006 , for designing and marketing addictive products while downplaying the risks. Now social media companies are being challenged for building systems that keep users – especially children – hooked, despite internal evidence of harm. The shift is significant. It moves the focus from what users choose to look at to how platforms are built and monetised, framing the platforms as products whose design creates foreseeable risk. Yet, as with the early years of tobacco litigation in 1998, a crucial question cannot be ignored. Do the costs of these lawsuits go far enough to change corporate behaviour? In the California case, Meta was ordered to pay damages of $4.2 million in combined punitive and compensatory damages. YouTube must pay $1.8 million. Set against the scale of these companies’ finances (see Figures 1 and 2), the contrast is stark. In December 2025 Meta reported $74 billion in annual net income, while Alphabet (Google’s parent company) reported $132 billion dollars in annual net income. In that context, verdicts of a few million dollars are financially insignificant, amounting to only 0.006% of Meta’s yearly earnings and 0.001% of Alphabet’s earnings, even when compared with net income figures from a decade ago. A larger award issued by a jury in New Mexico, of $375 million against Meta for failing to protect children from exploitation and mental health harms on its platforms, is still small at 0.5% compared to the overall scale of these companies’ earnings. Figure 1 Source: author Figure 2 Source: author This exposes a deeper governance problem. If litigation is the primary accountability mechanism but penalties remain too small to affect the underlying economics, companies can simply treat these payouts as a cost of doing business. The result is a structural mismatch between the scale of digital harm and the scale of corporate consequence. Monetary penalties, even when symbolically powerful, rarely touch the strategic core of the business model. They do not require firms to rethink the design choices, incentive structures or data‑driven architectures that create the risks in the first place. Instead, they are absorbed into legal reserves and normalised as part of operating in a high‑risk, high‑scale digital environment. History offers a parallel. In the early years of tobacco litigation in America, between the 1950s and 1980s , companies often won cases or paid modest damages . Only when lawsuits multiplied and states co-ordinated their actions did the financial risk become large enough to force change. The Master Settlement Agreement, which required tobacco companies to pay over $200 billion and accept strict advertising restrictions, fundamentally altered the industry’s incentives. Social media is not yet at that point. But at the same time, the legal landscape around digital harm is widening. The recent social media rulings sit alongside a growing number of cases involving other digital technologies, including artificial intelligence (AI). In one lawsuit against Elon Musk’s AI company, xAI, has plaintiffs allege that its model generated non-consensual sexually explicit images of real people, including minors . The claims centre on inadequate safety guardrails and foreseeable risks – echoing the same design‑based failures seen in social media. Across both social media and AI, powerful systems are being deployed at scale without robust safeguards and harms are being externalised to individuals and communities. While new regulatory regimes – such as the Britain’s Online Safety Act , the EU’s Digital Services Act and the recently adopted AI Act – are now beginning to take effect, they followed years in which harms accumulated with limited oversight. In this gap, litigation is stepping in where regulation has lagged. But here too, the financial exposure so far appears too small to fundamentally change the incentives that drive design decisions. If fines remain capped at levels which are insignificant relative to global revenues, companies may still find it more profitable to prioritise speed to market and competitive advantage over safety. The emerging wave of litigation against social media companies could, in time, change this calculus. Thousands of cases are already pending, brought by individuals, school districts, mayors and city councils . If these cases begin to result in larger, co-ordinated settlements, the financial risk could start to resemble the pressure that eventually forced change in the tobacco industry. For example, litigation before the 1980s had little or no consequences. But in 1988 Cipollone v Liggett Group weakened tobacco’s legal immunity and opened the door to later claims under the Master Settlement Agreement in 1998, which imposed over $200 billion in payments. The decline in Meta, Alphabet and Snap’s share price on 26 March 2026, after the recent verdicts, hints at the possibility that investors are beginning to reprice legal and regulatory risk, recognising that design‑based liability could threaten future cash flow because the verdicts expand the range of possible outcomes in ways the market can no longer ignore (see figure 3). But we are not there yet. Figure 3 For now, the verdicts are important signals, not structural shocks. If litigation, regulation and public pressure converge to make harmful design genuinely unprofitable, then this period may be remembered as the point at which digital governance began to catch up with digital power. This moment exposes a gap between symbolic accountability and structural change, offering a warning that relying on litigation alone is unlikely to deliver the scale of change needed to protect children and young people from design-driven digital harm. It could also act as a catalyst for stronger governance frameworks. That could include design by default safety standards , independent audits of recommender systems and AI models, revenue linked fines and clearer duties of care that extend beyond content moderation to the architecture of platforms themselves. Closing the gap between symbolic accountability and structural change will require more than individual lawsuits. What is needed is a rethink of how we govern the digital systems that shape our lives and impact the health and wellbeing of our societies. This article gives the views of the author, not the position of LSE Business Review or the London School of Economics. You are agreeing with our comment policy when you leave a comment. Image credit: antoniodiaz provided by Shutterstock. The post Is big tech facing its big tobacco moment? first appeared on LSE Business Review .

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