Collusion via Government: The Meta Settlement’s End Run Around Antitrust Law | American Enterprise Institute– www.aei.org

In a market economy, collusion is an ever-present temptation. Even Adam Smith, perhaps capitalism’s most illustrious forefather, wrote that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Antitrust law is the government’s answer, equipping federal and state officials to punish competitors who coordinate.

But what happens when the government itself becomes the tool of collusion?

An interesting clause in Meta’s recent landmark settlement raises the question. In August, Meta settled a lawsuit by 47 state attorneys general (and others) alleging certain addictive design features endangered children. The company agreed to enact an age verification system and to place significant restrictions on child and teen users, including two-hour daily time limits and nighttime usage restrictions. It also agreed to pay up $17.1 billion in damages to the state plaintiffs. “Up to” is an important caveat, because $5 billion is contingent on the state attorneys general getting competitors YouTube, TikTok, and Snap to agree to similar financial penalties and product changes.

One can understand why Meta included this contingency clause. Instagram and other Meta properties compete vigorously with the company’s competitors for the lucrative youth segment. In isolation, the settlement’s reforms seem like unilateral disarmament: The teen user experience will be eroded on Meta platforms, leading teens to switch to unrestricted platforms. The restrictions become more palatable if there is a credible belief that this is the first step toward an industry-wide solution to the problems that animated the complaint. Indeed, Meta’s chief legal officer, C. J. Mahoney, framed the settlement as the company “partner[ing] with state attorneys general to set a new industry standard.”