By Adam Levine

The regulatory risk surrounding social media came into sharp focus after Meta Platforms lost in two closely watched trials last week. While the results in California and New Mexico still must survive appeal, they give other plaintiffs a roadmap for beating social media in court.

Though last week's penalties totaled less than $400 million, many investors are focused on the costs associated with these trials, including future judgements that could possibly rise to the tens of billions of dollars down the road.

But the bigger picture for the social media companies may be the ways in which they are allowed to design and market their apps, and how this may affect the revenue side of the picture. In the end, social media apps may be forced to verify all users' ages, and segregate minors from adults.

In last week's California case, the plaintiff claimed that the design of social media apps had caused her to become addicted to them as a child, degraded her mental health, and exposed her to exploitation from adults. If "addictive" app features such as the endless scroll or autoplaying videos were to become widely regulated, it would curtail longer user sessions, reducing the number of ads that users see.

"We respectfully disagree with the verdict and will appeal," said Meta in an emailed statement. "Teen mental health is profoundly complex and cannot be linked to a single app. We will continue to defend ourselves vigorously as every case is different, and we remain confident in our record of protecting teens online."

In the New Mexico case, the state convinced a jury that Meta was not being truthful when it marketed its apps like Facebook and Instagram as being a safe place for minors. If Meta couldn't position its apps as safe, parents might forbid their children from using them, hindering future growth.

At the root though, both cases got deep into the issue of self-declared age in these apps, and the interactions between adults and minors. Predators are attracted to these platforms because of the reach and anonymity they provide.

"The era of, 'we'll just take your word for it when it comes to age'? I think everybody can now see that it's over," says Matt Kaufman, Roblox' chief safety officer.

Australia was the first country to put a hard ban on social media users under 16, but there is an emerging legal and regulatory framework in other countries and in U.S. states.

Previous state laws have been struck down in court on free speech concerns, but the latest victories show a way around making regulations about content and speech. Arguments regarding Florida and Georgia social media laws were heard before an Atlanta federal appeals court last month, and this may be the next indication of where the law is headed in the U.S.

The regulatory environment is a patchwork mess, but it is beginning to resolve slowly around age verification of users, and forbidding minors on the platforms, or at least keeping them segregated from adults that they don't know. This is a step the industry has been resisting for some time as it brings up all sorts of speech, privacy, and security concerns.

More concretely, it adds to costs while at the same time slowing sales growth. Age verification creates friction, even if only a small portion of users resist. Banning minors or their interactions with adults will also impact user and ad revenue growth.

We have a live-fire experiment in age verification happening right now at Roblox, a social gaming platform that began rolling it out early this year. Roblox has been very successful with young people, with 144 million daily users last quarter, and a crucial part of its rapidly growing success is text and voice chat among players. Now, to use any of the social features, players must undergo an age verification process, and chat is restricted outside of age cohorts.

According to data from Roblox analytics firm Gamebeast, the impact on chatting was immediate and severe. Even two months into the program, there was far less chatting than before the change, and this will surely impact the company's first-quarter sales.

But this is a long term shift that goes beyond a single quarter. "Our thesis is that if we actually know the real age of the people on our platform, we can do a lot of things from a product perspective to provide a better communication experience," says Roblox CFO Naveen Chopra. "And so that's the journey that we're on."

Zander Brumbaugh, CEO of Gamebeast, says he's seeing signs of this. "They're doing matchmaking under the hood to prioritize putting players who can chat with each other in the same servers automatically."

In any case, this is a long road for Roblox, but it would be an even bigger deal for a company on the scale of Meta or Alphabet's YouTube, which was also a defendant in the California case. At the other end of the spectrum is Wizz, a French social network for young people with only 20 employees which has included age estimation from the start. When the app launched in 2019, the company discovered that connecting people of the same age was crucial to the user experience.

Wizz puts half its operational costs into user safety.

Wizz' COO Alexandra Ryabova thinks the Meta court losses are the beginning of a new era for social media. "It's no longer the wild west of safety."

Write to Adam Levine at adam.levine@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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April 01, 2026 14:30 ET (18:30 GMT)

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