Meta 的诉讼和解被视为战略胜利；其财务成本极低（92亿美元经济价值），且应用限制措施有利于公司的长期地位。

Before we jump into the Meta news and why I believe this was a decisive victory on Meta's part, I first want to disclose my personal investment in Meta.

I'm looking at things from an investor perspective, from the perspective of an owner of Meta. A lot of people say, "Well, Joe is a phones Meta, therefore he's biased on the results of this lawsuit." And I think that's a fair criticism to point out when you own a stock, you're more likely to have invested interest in it and potentially a bias and not being able to look at things objectively. But, I don't believe that's the case here.

If Meta did have a bad outcome or one that I thought was truly concerning, I would say so, like I've done with many companies that I've owned and owned in the past.

With Meta, I do not see that situation today. What I see with this lawsuit and this settlement is a strategic victory.

Now, to make it clear, when I'm talking about victory, I'm talking about in terms from an investor. From a legal standpoint, Meta settled. So, in this case, there's lots of reasons that companies could settle. And when I looked at the case with Meta, it became very clear why they agreed with this settlement. It is overwhelmingly in their favor.

Now, if we look at the details of this settlement, it starts off by looking really bad. And I believe this is what a lot of investors are getting confused about. Meta is agreeing to pay $18 billion to the 48 states, bringing an end to the massive federal trial over social media's harm to teenagers.

And they also mention that Meta is also making sweeping changes to its services, Facebook and Instagram, including implementing a 2-hour time limit to its apps.

This looks real bad. Meta is paying $18 billion, they're changing the time limit. So, all of that looks pretty bad until you keep reading a little bit more into the details.

In a unique setup, Meta will pay out only 70% of the settlement amount unless TikTok and YouTube join in.

Meta will only pay the remaining 30% of its settlement, also $5.3 billion, if the two other companies agree to the terms. Oh, so now we get to the first big caveat. So, Meta is not paying $18 billion, unlike the headlines that you're seeing. They're just not paying that today, again, unless TikTok and YouTube decide to restrict the amount of time teens can spend on their service, which I don't believe they're going to do, but we'll discuss that in a bit.

Meta is really paying 70% of that number, which is $12.7 billion. So, this whole settlement from all these states, the big lawsuit, is $12.7 billion.

Now, let's just put this in context. We have Meta here, a company that generated in the trailing 12 months $228 billion. A high-margin, cash-producing, fast-growing, super-high-revenue company.

$12 billion in and of itself is not a lot of money for Meta. Meta is spending hundreds of billions of dollars on capex. But there's another detail here that makes this even more favorable for Meta, another big caveat. Meta did not agree to pay the $12.7 billion up front. They're not paying it this year, they're not even paying it next year. They agreed to pay it in installments over a decade, 10 years.

And that is incredibly favorable to Meta because there is a time value to money. We know that money today is worth more than money in 10 years. If you apply an 8% discount rate to this $12 billion over 10 years, it's more like $9.2 billion. So in real economic terms, Meta's paying about $9 billion.

This is from a company that just did $228 billion in revenue in the trailing 12 months. This is otherwise known as a speeding ticket. It's a a slight bump in the road for Meta financially.

It's not even it's something that they could round off and most investors wouldn't even notice. And investors may view this as just a a total loss. This is $9 billion economically speaking that's a complete loss for Meta, but that's not really the case.

See, Meta got something out of this. They didn't just pay $8 billion, they are getting something in return. Meta has made a calculated decision. Meta has agreed to pay a small amount of money for legal stability, for regulatory stability, and to avoid the unknown outcome of going to trial.

Anything can happen in trial. Even if Meta is 90% in the right or 95% in the right, there's always the chance that some judge could do something crazy and cause them to divest Instagram or something insane. It's unlikely, but Meta just made sure that won't happen. They just paid $9 billion to ensure that outcome can ever happen. And that makes perfect sense for Meta.

They were most likely to win this case, but even so, they wanted to avoid the potential outcome and the uncertainty from going to trial. So they decided to pay this speeding ticket to end it.

Now, the total amount of money that Meta is paying in this settlement over the next 10 years is somewhat negligible. It's not nothing, but it's not a lot of money and it won't impact Meta's intrinsic value or their long-term prosperity.

The bigger concern for many investors, including me, was the sweeping changes to the app itself. Regulators have the power to change how apps work, restrictions on them, control how users are able to interact with the app. And there's things that they could do that are potentially very damaging to Meta's business if they make the app very ineffective.

And there were a lot of changes that they made to the app as part of this agreement. But this is where things get even better for Meta. A lot of investors will read through this and see these changes as very damning for the company, that there's lots of restrictions, but I believe there's a different story going on here.

Meta starts off by essentially framing this as something that they were already moving towards. They say, "Ensuring teens have safe and productive experiences in our platform is an absolute imperative for Meta. We want to get this right for parents and teens, and that's why we've partnered with the state attorney general to set new industry standards."

The brilliant part with how Meta's framing this is they're not looking at it as though they're a unique issue. Meta believes strongly that every social media app, every large company app that affects teens should be regulated in somewhat similar fashion. And they are framing this as working in collaboration to set industry standards.

No, this isn't just a lawsuit where Meta's making some concessions. This is a reframing of industry standards. And now Meta has the moral high ground to call upon other social media companies to join them in making their app safer for children.

Calling on TikTok and YouTube to join us. While this is an important step, the fact that teens move fluidly between dozens of apps a day, all platforms should empower parents to support teens by putting the same measures in place. Because we know that when teens are restricted on one app, they simply move to another. For meaningful progress to happen, we urge TikTok and YouTube to join us and the state attorney general in supporting this new standard to ensure teens use social media in healthy and responsible ways.

So now now Meta's saying, "Look, we're being responsible. We're agreeing to all these limitations. We're agreeing to all of these different things. And we're calling upon YouTube and TikTok. You guys have to join us now.

So, Meta is completely shifting the conversation here. They went from a place where they are the ones being irresponsible, damaging teens, to now the ones saying, "Look, we're being very responsible. We are working in collaboration with the state attorney general. We set industry guidelines and standards that we've collaborated in a bipartisan agreement, and now we're calling upon YouTube and TikTok to join us."

Do you guys want to join us? Do you want to be responsible, too? Or do you not really care as much about teens' health? Do you not care as much as we do? It's incredible the way that they've shifted this conversation through this settlement.

They outline in detail the new protections for teens and stronger controls for parents. They say, for example, there's going to be a time limit. A default 2-hour daily limit that teens can only turn off with a parent's permission. This limit is cumulative across Facebook and Instagram, and time spent scrolling on both apps counts towards the total, including if we detect that someone has multiple accounts.

Now, with this time limit, I actually, as a a parent, I think this is a good thing. I don't think teens should be on social media, especially Facebook and Instagram, for 2 hours a day. 2 hours is already pushing it. So, having a time limit of 2 hours by default that the parents can change, I think is excellent. It's an excellent product adaption. It is something that is needed in these type of products.

Now, I am a little bit pessimistic here that I think most parents will immediately give in when their teenager complains that they want more time. So, I see them starting off with this daily 2-hour limit, teenager running into it, teenager complains to mom and dad, "Oh, just give me more time, just this one time." The mom gives in, unlocks the time limit, and then it's gone. So, I think for a lot of for a lot of families, this time limit's not going to last for long.

But, in the case that a parent does want a restricted 2 hours per day on social media, this is a really good future. It'll create a better relationship with social media. This only stands to benefit Meta as a product.

If you believe that products over a lifetime should benefit users and have positive engagement and positive results, then you don't want teenagers spending 5 hours a day scrolling Instagram. That's not good for anyone. So, this is a restriction. Investors are viewing it as a negative thing when this will improve the relationship that teenagers have with Meta's products. How is that a bad thing? How is it a bad thing for Meta to have a better relationship with their teenager users than they do today?

So, I don't view this as bad at all. I I think the time limit's completely fine. I think it only stands to benefit Meta as an investor, Meta as a company, and teenagers in the relationship with the company.

We also have night mode, which is another thing that I think is very healthy. Night mode is a default block from our apps between midnight to 6:00 a.m. So, teens under 18 can't be up in the middle of the night browsing Instagram Reels. How is that a bad thing? This is neither bad for Meta. It's not bad for them at all because it makes their products safer for their teenagers. It makes them have a better relationship with teenagers. It's better for parents, and it's better for the teens. Every single party benefits in this regulation. Every single one of them.

Now, I want to be clear here. If these type of limits were put on for adults, I would have a very different tone. I would not be in favor of any of these type of limits on adults. Adults should be able to stay up and browse whatever they want whenever they want. But, these are teenagers. These are not adults. Having time limitations, having night time mode is a good thing.

Notifications will be muted by default between 8:00 and 3:00 p.m. During those hours, teens will no longer receive push notifications except for direct messages and alerts about their account security and safe making it so that they don't have the notification pop up, that they're not distracted during school hours, I do not see as a negative thing.

They'll also receive prompts to just let them know, "Hey, you spent 15 minutes on this. You know, think about doing something else or for a break." Because they don't want you to be in the habit of just continually scrolling forever.

Teens will be able to choose a non-algorithmic feed. One that isn't personalized by recommendation systems as their default. They will periodically remind them of this option, and parents can choose to adjust their teens default experience and requirements in this setting. So, basically, they can just do a chronological feed. They can see what's been posted by their friends or family. They don't have to have the algorithmic defined feed.

They have autoplay controls. Teens can now turn off the autoplay feature. Another thing they're doing for teen accounts is disabling cosmetic surgery and extreme makeup filters. In addition to our existing policy to block teens from using cosmetic surgery filters, we're we're now blocking teens from using extreme makeup filters.

These are great changes for teens accounts. These are all positive things. We don't want teens believing that they have to have their faces plastered with makeup to look like the best-looking people. That's not That's not something we want to project to them. So, these type of changes, every single one of them, are things that make the product better for teenagers.

Now, again, I would not be in favor of any of these for adults, and I think that would be a big overstep with the government to try to implement these type of regulations for adults. But, for teens, this is appropriate.

Now, there's a lot of ways to look at these restrictions. One of them is just as a teenager, you could look at it from that perspective and say that this makes a much more healthy app for teens, which is just a good thing. Anything that's healthier for children and teens is a good thing.

But, even from an investor perspective, if we change the frame from teenagers to the mindset of an investor, many investors look at this as a negative. That Meta is now becoming more restricted and more tied down, and teens won't be as addicted or engaged in the apps. Maybe they won't generate quite as much ad revenue. Investors are completely incorrect in that thinking.

That Meta is now becoming more restricted and more tied down, and teens won't be as addicted or engaged in the apps. Maybe they won't generate quite as much ad revenue.

First of all, the amount of ad revenue that teenagers generate for Meta is incredibly low by every third-party estimate. Teens make up only a small portion of the overall user base. Meta literally has 3.6 billion users every single day. 90% plus of them are adults. And adults have the purchasing power. Adults are what most companies are

These type of controls, these added controls for teens accounts, which are meaningful, they enhance and improve the relationship between teenagers and Meta products. It makes it safer, makes it better, makes it so that they'll view it more favorably. It also puts a lot of parents at more ease. They feel like they have more control over their teenagers. They don't have to worry quite as much about Meta products.

In fact, with all these additional controls, parents may actually feel that Meta products are better, more regulated, more safe, more responsible than the counterparts of YouTube and TikTok. So, this actually positions Meta in a much more favorable way when it comes from the perspective of teenagers, parents, and regulators. All of the relationships here should improve as a result of these regulations. And it also again pits YouTube and TikTok as the ones now being irresponsible.

So, if we summarize why Meta really won here, they turned an $18 billion settlement into really a $12.7 billion one that's paid over 10 years, which has more of an economic impact of about 9.2 billion if you apply an 8% discount rate. So, they're paying a fine of a 9.2 billion dollars to make their app better for teenagers, to make it so that they have more sensible regulations for these accounts, to give parents more control. They simultaneously made their big fine go from 1.3 trillion dollars, that was the the big numbers plastered on Fox News, down to 9 billion dollars. That's not quite the same 1.3 trillion compared to 9 billion, not quite the same. They minimized the financial penalty to a minuscule amount. And at the same time, they improved their product.

And then they also somehow tied YouTube and TikTok into the agreement. They positioned themselves as working with regulators to establish ground rules of how social media apps should run. And they're now inviting YouTube and TikTok to join them. If YouTube and TikTok join them, that 2-hour time limit per day by default goes to only 1 hour. Meaning that teens would only by default be allowed to watch YouTube for 1 hour per day. Obviously, YouTube is not going to want to do that. Google will likely fight that type of agreement, making themselves look like they're on the outs of regulators, not Meta. The way that Meta has been able to craft this agreement is incredible, and it's a strategic victory on their behalf.