(Preview) Meta’s New Restrictions for Teens, Nvidia’s Open Source Investments, Q&A on Netflix, Druckenmiller, Parameters and Performance
- Ben Thompson reads Meta's record $17.1 billion settlement with 29 states — two-hour daily limits for kids, mandatory pauses at 15/60/90 minutes, midnight-to-6AM blocks, no push notifications during school hours — as classic regulatory capture rather than a corporate defeat. “Large corporations are political animals... if you're going to get there, it's best to get there on your terms”: Meta negotiated its outcome, locks in its payout over 10 years, and removes a long-standing overhang on the stock.
- The settlement's cleverest clause, according to Ben: Meta only has to pay if YouTube and TikTok sign up too — “Hilarious” — and courts will likely treat the deal as de facto precedent amid “probably 1,000 lawsuits filed yesterday.” Meta then ran full-page ads in The Washington Post, the Los Angeles Times, and The New York Times imploring rivals to adopt the same rules; compliance-heavy requirements like 90% response within nine hours favor the incumbent with resources.
- Ben's principled objections: the deal is “very much an end run around the First Amendment” — limits on eating-disorder discussion and beauty filters “pretty clearly fall under First Amendment protections” but get the force of law without being law — and it embeds “a societally sanctioned shift of responsibility to large, faceless organizations for raising children.” Andrew counters that child safety as a compelling interest could overcome some First Amendment concerns in actual legislation; Ben says that is not going to happen.
- Andrew is taking a wait-and-see approach on whether the restrictions change behavior: Australia's under-16 social-media ban saw 86% of surveyed children on age-restricted platforms before the ban and above 81% three months after. Ben adds that a lot of the harms research is “heavily confounded” by definitional changes and changes in the returns on prescribing certain conditions around 2012 — “the smartphone was 2007. Why is it 2012?” — and U.S. numbers “vary wildly from the rest of the world.”
- On age verification, Ben lands on Apple and Google providing an OS-level API — “if we're going to do it, let's do it well, even while I reserve the right to object to the overall doing it” — rather than each app jerry-rigging its own identity checks. He acknowledges the libertarian objection that the API could be abused to ascertain who people are. Platforms are effectively “being mandated to pry ever more deeply into understanding who you are,” the exact surveillance everyone spent a decade complaining about.
- The deeper frame: this is a conservative-vs-libertarian fight, not left-vs-right, and Ben — explicitly persuadable, issuing an “early call for feedback” — makes a small-c conservative case: “Sometimes gray is good,” and laws matter partly as expressions of societal disapproval that make it easier for parents to parent.
1. A record settlement, and Ben's openly conflicted read
- The news: Meta's $17.1 billion settlement with 29 states over social-media addiction claims — two-hour daily limits on Instagram and Facebook for children, “productive pauses” at 15, 60, and 90 minutes, nighttime blocks from 12AM to 6AM, no push notifications from 8AM–3PM on school weekdays during the school year, age assurance, limits on beauty filters and visible like counts. Implementation and effectiveness will be assessed by an independent auditor and the settling states.
- Ben's unusual opening — an “early call for feedback”: “I have a number of, like, conflicting takes on this, and there's a real opportunity to sway me personally.” His default: “parents need to do their jobs,” and the settlement implies “a societally sanctioned shift of responsibility to large, faceless organizations for raising children.”
- Andrew counters that guardrails could make parenting easier. They discuss school phone pouches that lock devices when students enter, preventing a child from retreating to old friends on WhatsApp or Instagram Reels and forcing more interaction at a new school.
- Second objection, on principle: “a settlement like this is very much an end run around the First Amendment.” Limits on eating-disorder discussion or beautifying filters “pretty clearly fall under First Amendment protections” — you couldn't pass such a law, but a private deal with a bunch of AGs “is going to basically have the force of law.”
- Andrew says child safety could provide a compelling interest for overcoming some First Amendment concerns in actual legislation, while acknowledging he does not know exactly how that would be resolved. Ben replies that Congress codifying the framework is not going to happen.
2. Will it even work? Australia and the confounded research
- Andrew's wait-and-see case before declaring a watershed: Australia banned social media for under-16s and 86% of surveyed children reported using an age-restricted platform before the ban — three months later the figure was still above 81%.
- Ben's data skepticism: the harms literature is “heavily confounded by changing definitions in the exact same time period.” He believes the issue was related to Obamacare generally, while definitions and the returns on prescribing certain conditions were changing as smartphones became widespread. “The smartphone was 2007. Why is it 2012?” U.S. numbers “vary wildly from the rest of the world,” which he says adds credence to the U.S. definitional-change explanation.
- Ben says the uncertainty leaves lived experience as something people ultimately have to consider. Andrew notes that people project their own experience with these tools onto society; Ben asks how many users have looked up from two hours on Reels and felt the problem was real. Andrew adds that if Twitter shut off after one hour each day, he would be better off.
3. Sometimes gray is good: the conservative-libertarian fault line
- Ben's counterweight to his own libertarian instincts: laws are useful when they “express societal disapproval.” His analogy — people who “always felt vaguely guilty” smoking a joint in college sought legalization without thinking through “industrial-grade weed... you walk down New York City and it stinks.” The lesson: “Sometimes gray is good. It's okay to be there. We don't have to make everything black and white.”
- The framing he expects to matter more: invoking Scott Alexander's gray-tribe/blue-tribe piece, Ben argues the conservative-libertarian split on the right is “a fairly massive chasm” coming to the fore — “this is not a right-left debate.”
- The parenting payoff, per both hosts: defaults matter. There's “a collective-action problem with social media among children,” and parents can point to the law when the default is limiting exposure.
4. Age verification belongs to Apple and Google
- Ben's resolution of another issue he “can't decide”: if verification must exist, Apple and Google should own it — they have root access, are highly trusted, and an OS-level yes/no API is more scalable and preferable than “each app in this future having to jerry-rig their own age-verification process.”
- He also voices the libertarian objection: who gets to verify who someone is, and an API could be abused to ascertain identity. The irony both flag is that platforms are “being mandated to pry ever more deeply into understanding who you are so that they don't break the law” — “which we all complained about for 10 years.” Ben's landing: “if we're going to do it, let's do it well, even while I reserve the right to object to the overall doing it.”
5. Business analyst Ben: regulatory capture, executed well
- The through-line: Meta “got to negotiate their outcome” — burying all the bodies at once, setting its payout over 10 years, removing a stock overhang, and, as Ben describes it, only having to pay if YouTube and TikTok sign up too. “Hilarious.” Compliance burdens like responding within nine hours at 90% are “classic regulatory capture: ‘We can handle this.’”
- Ben notes that Meta did not admit fault. Even if it considers the terms unfair or the measurements wrong, he argues that large corporations are political animals: Meta is getting ahead of where politics is going, putting the issue to bed, and doing so on negotiated terms.
- Why it matters despite no legislation: Ben says this is another end run around the broken legislative process. Andrew explains that courts facing novel issues will look at how other courts handled this, making the settlement “a pretty persuasive tent pole”; Ben expects most courts to defer to it.
- The competitive squeeze: Meta's open letter to YouTube and TikTok ran as full-page ads in The Washington Post, the Los Angeles Times, and The New York Times — Snap was not even mentioned, which Sagar Ejati noted as an amusing indication of where that platform stands. Ben first guesses Google will move first, then reverses himself and guesses TikTok: “I don't know.”
- Closing jab, via a Sagar Ejati tweet asking why the rules shouldn't apply to adults — Ben: “We do need age limits. The age limits are just all in the wrong direction... Kids are fine.” Andrew nominates anyone over 65 for strict limits first.
Full transcript
Hello, and welcome to a free preview of Sharp Tech. Hello, and welcome back to another episode of Sharp Tech. I'm Andrew Sharp, and on the other line, Ben Thompson. Ben, how are you doing?
I like to take issue with the tech industry. Too much news on Wednesdays. We've talked about this. The worst part is that I'm always vaguely nervous about Sharp Tech.
Mm-hmm.
Because, of course, it's timely. We're recording on Thursday, so we can talk about stuff that I haven't written about. On the other hand, it just reiterates—apropos of the conversations we've been having—the value of writing is that I feel fully confident I've thought through all my takes instead of going a little bit off the cuff.
Right.
Maybe I won't do a lot of editing for this one.
We're going off the cuff today.
We're going to see how it goes, yeah.
It is pretty funny because it didn't feel like summer until the past 2 weeks. The news cycle really started to slow down. Did you experience that while writing Stratechery over the past couple of weeks?
Oh, absolutely. I took my vacation earlier than usual in July.
Right.
Usually I take the vacation in the middle of August.
And it was busy back then. In July, it was very busy.
I'm hurting right now, coming up with topics. I'm staying up later than usual to write, mostly because I'm dilly-dallying, trying to figure out what I'm actually motivated to write about here.
Squeeze some meaning out of all sorts of nonsense, yeah.
But, basically, yesterday it started to feel like, okay, summer is drawing to a close. Maybe it's because my kid went to school this week. Who knows what it is, but yes, we are approaching the end—
As of Wednesday—
Of summer.
Summer officially ended. So yes, we have a number of news hits to work through this week. I will begin with news that came down Wednesday morning, and I'll read a tweet from Variety:
“Meta will enforce a 2-hour daily limit on Instagram and Facebook for children as part of a record $17.1 billion settlement with 29 states over social media addiction claims. Behavioral remedies agreed upon as part of that settlement include productive pauses for children, including mandatory pauses after 15 minutes of continuous use, and again at 60 and 90 minutes to interrupt endless scrolling.
“Nighttime blocks restricting children's access from 12:00 AM to 6:00 AM. Limited school-time access for children, eliminating push notifications on weekdays from 8:00 AM to 3:00 PM during the school year. Robust age-assurance measures to more effectively verify the age of young users.
“Safer, age-appropriate content controls, including stronger safeguards against bullying, content promoting eating disorders, and content related to suicide and self-harm. Stronger, more user-friendly parental controls and limits on social-comparison features, including beauty filters and visible like counts that have been linked to poor mental-health outcomes in kids and teens.
“Both the implementation and effectiveness of the features will be regularly assessed by an independent auditor and the settling states.”
So this seems like a pretty big deal. What comes to mind when you see this news?
Is it a big deal? Well, actually, what comes to mind, number one, is that this is the early call for feedback because I have a number of conflicting takes on this, and there's a real opportunity to sway me personally, I think, one side or the other around a number of these topics.
Okay.
1. Parents Must Do Their Jobs
First up, my default position is that parents need to do their jobs.
Mm-hmm.
There's a certain implication of a societally sanctioned shift of responsibility to large, faceless organizations for raising children that properly sits with the parents. Even if it's well-intentioned, arguably necessary, or whatever case you might make, if you zoom out, there's a very disconcerting structural shift embedded in this entire topic.
Mm-hmm.
That's number one. Number two is that a settlement like this is very much an end run around the First Amendment.
Okay.
There are things in here about, for example—and I'm going to use extreme examples because people care about them—limits on discussion about eating disorders, for example.
Mm-hmm.
Or there's a ban, or a limit, on some of the beautifying filters and stuff like that. All of those pretty clearly fall under First Amendment protections.
Mm-hmm.
You couldn't pass a law that bans those sorts of things, but in this case, you have this settlement between a private company and a bunch of AGs. It's going to basically have the force of law. It's going to be referred to, and it's going to be a basis for these sorts of things—
Yeah.
—without actually being a law.
So it makes you—
Just on principle.
—instinctively uncomfortable on principle.
It makes me uncomfortable. The counter to all of this is that this stuff is hard and difficult. I worry about my son being on Instagram Reels too much, right?
Well, I would say one counter on the parenting point is that it would make parents' jobs easier across the country.
Right.
Because it does seem very, very difficult to constantly monitor how your kids are using cell phones.
Right. He does go to a school where they have these pouches that every kid is assigned at the beginning of the year. When they get there, they have to put the phone in the pouch, and the pouch automatically locks when they go into school or something like that.
Right.
Same pouch you use when you go to a Dave Chappelle comedy show. Seems like a no-brainer as far as I'm concerned.
I think they're awesome, especially in the context of my son moving back to America and going to a new school. You could imagine those first few weeks in particular. It would be so easy—
Just living in WhatsApp.
—to just retreat to a corner.
Yeah.
—and talk to your friends back in Taiwan or just be on Instagram Reels. Whereas you're there, you kind of have no choice but to talk to others.
Mm-hmm.
I've referenced this in passing as a challenge that I think my daughter had going to college, where it's just so easy to stay in touch with your old friends that you don't have the “I have no choice but to make new friends” sort of pressure that we had in college.
Sure.
And this is why it's a hard thing to talk about, because I could definitely see both sides. I could definitely be a hypocrite. And then, overarching all of it, is business-analyst Ben, which is regulatory capture, Meta burying all the bodies at once, locking in how much they're going to have to pay, and basically trying to set the rules of the road going forward.
Right, and pressuring their competition to make all of these same changes themselves, which will be interesting and is sort of a topic unto itself. In terms of whether this is a big deal, I do think it's a fair question. One thing I'm keeping in mind before declaring this as some kind of watershed moment for our relationship to technology is that Australia banned social media for kids under 16, and the early returns on that experiment are not great because kids have found ways to work around the ban.
Right.
Eighty-six percent of children surveyed reported using at least one age-restricted platform before the ban. Three months later, that figure remained above 81%, so not a huge change down there in Australia. I'm taking a wait-and-see approach in terms of what this actually means and how teens will use Meta platforms, but—
2. The Evidence Remains Uncertain
Well, the other thing to note is that a lot of the research—
Uh-huh.
—about the harms—that come from smartphones and social media is heavily confounded by changing definitions in the exact same time period—
Okay.
Basically, I believe it was related to Obamacare generally, but the definitions and the returns on prescribing certain conditions were changing at the same time smartphones became big. This rise was in 2012, or around that time period. This is something people should look into before they start accepting a lot of these quantitative figures, where people point to a specific time period and there are very legitimate and real things that would significantly change the numbers, so a seemingly shocking one-time shift would be like, “Oh, there's the smartphone. You can see it.”
Yeah.
It's like, well, the smartphone was in 2007. Why is it 2012? That is something overarching here.
And I bring this up not because I want to litigate this point, other than to say there’s a lot more uncertainty around this, and there really is an aspect of all this that you ultimately have to go on, to some extent, which is lived experience.
I was going to say, yeah.
3. Society Needs Some Guardrails
And I think the optimistic way to frame this is—and I think you mentioned this before, and I just want to build on the point you said—to the extent it helps parents parent, it’s a positive thing.
Mm-hmm.
So, for example, if you have these limitations there by default, right? Or it’s just like everyone’s doing it.
There’s a collective-action problem with social media among children.
Well, not just that, but sometimes laws are useful to the extent they express societal disapproval.
Mm-hmm.
Right? This is where I’m not a libertarian around things like legalized drug use, for example, or sports gambling. There was, I think, a real push among a certain cohort of people who liked to smoke a joint on the weekend in college. They always felt vaguely guilty about that because they knew they were breaking the law, and they were motivated by the desire to relieve their guilt by making it legal—not thinking about the implication of getting industrial-grade weed that people can get and smoke every single day, and you walk down New York City and it stinks.
Mm-hmm.
Right? There’s some aspect here of, even if the reality is kind of gray and ambiguous—and maybe this is my living-in-Taiwan background. I’ve talked about this in the context of the U.S., China, and Taiwan. Sometimes gray is good. It’s okay to be there. We don’t have to make everything black and white.
There’s a drive here like, “We had to make it clear this is legal because I felt bad—”
Right.
—kind of breaking the law. Actually, sometimes gray’s good, right? Is there an aspect of this where society broadly signaling that it’s okay to police your kids means parents can point to the law?
Mm-hmm.
They can realize that the default is limiting exposure, as opposed to the other way, where the default is whatever you may do. I mean, it’s almost a small-c conservative view of this.
Right.
You know, this is not a right-left debate. This is a conservative-libertarian debate. That’s what this question is coming down to in many respects.
Yeah, and I would add, in terms of what you were talking about with our own lived experience, I do think that’s why a lot of people identify with research that links social media use and phone use to poor mental-health outcomes. I think a lot of people look at their own experience using these tools and are not a fan of how it makes them feel. And they project that experience onto society.
The U.S. numbers vary wildly from the rest of the world, which adds credence to the—
Definitions.
—the U.S. definitional change that sort of happened. But to your point, how many of us have looked up from 2 hours on Reels and been like—
It feels true. If you’ve used a smartphone over the last 15 years, it feels true. But I also, from a social perspective, do think it’s a small-c conservative position to say regulating human behavior to optimize for productivity and a healthy society became taboo over the last 20 or 30 years, but there are healthy arguments in favor of laws that do that.
Again, if Twitter just shut off for me after 1 hour every day, I would definitely be better off. And I should make that change.
Yeah, there’s a real—I think this is going to be increasingly important—where Scott Alexander wrote a piece a long time ago about gray tribe versus blue tribe. It was really compelling and framed the reason why the gray tribe and blue tribe hate each other as being that no one even thinks about the red tribe.
Hmm.
That’s way out there. But that was about a distinction on the left. If you read Scott Alexander, you saw a lot of the rationalists and EA stuff, because he’s a brilliant writer and a very foundational figure with a lot of that stuff.
But on the right, the distinction between conservative and libertarian is actually a fairly massive—
Gulf.
—chasm.
Okay.
Chasm, whatever it is.
Sure.
Right? I can see that distinction actually coming to the fore more and more, and a lot of people being somewhat oblivious to it just because they’re not even aware of the distinction.
The age-old fight, sure.
And this is a great example, to your point. Another example of this is—maybe I don’t know how much this maps—another issue I have a really hard time talking about because I can’t decide—
Mm-hmm.
—the age-verification question.
Yeah.
On the one hand, if we must have age verification, I do think that should be Apple and Google’s responsibility.
Mm-hmm.
Already, they have so much trust. We’ve talked about this. You trust your smartphone provider the most. They have root access. They see everything. Apple’s entire privacy proposition is predicated on the fact that, “Trust us, and we’ll take care of everything else.”
In this context, them verifying who you are and giving you an API that says whether you’re above age or not feels much more scalable, usable, and preferable than Facebook having to—
Or each app in this future having to jerry-rig its own age-verification process. It just doesn’t seem very efficient.
Right. They’re being mandated.
Right.
They’re being—no, not just that. They’re being mandated to pry ever more deeply into understanding who you are so that they don’t break the law.
Which we all complained about for 10 years.
Right.
So, yeah.
Exactly. It’s funny how stuff changes, right? On the other hand, this is the libertarian side: Who are you to be verifying who I am?
Granular data. Yeah, sure.
And to have an API that can be abused—used in ways it wasn’t intended to—to ascertain who I am. Sure, it’s bad that Facebook can guess pretty well. We’re going to make it binary: yes or no, right? And sort of really understand deeply who you are.
I think I come down on Apple and Google providing this API just because the current of society is going in this direction.
Mm-hmm.
If we’re going to do it, let’s do it well, even while I reserve the right to object to the overall doing of it as we go.
4. Meta Turns Regulation Into Leverage
Fair enough. It will be interesting to the extent this could be a watershed moment for social media and how America uses social media. I think the way we get there is this is a framework that then is codified by Congress going forward, and—
That’s not going to happen, though. It can’t be, though. Number 1, there are First Amendment violations.
Hmm.
Number 2, this is just another end run around our broken legislative process. This is going to become the law, which, by the way, to the business point, is probably why Meta is not too upset about this.
Okay.
They got to negotiate their outcome.
And how this will work.
They’re still going to have lawsuits going on, but I would expect most courts to defer to this settlement going forward. There’s going to be a whole power game in suing everyone else in social media and pointing to this settlement and expecting the same thing.
Mm-hmm.
Meta gets to come in and say, “Oh…” There’s a requirement in there about responding within 9 hours at 90%, something that requires a lot of resources, right?
Right.
The classic regulatory capture: “We can handle this. Oh, and by the way, we can handle $18 billion,” or whatever it is, paid over 10 years. “And we only have to pay if YouTube and TikTok sign up as well.” Hilarious.
Not even a drop in the bucket—a molecule in the bucket—for Meta over the next 10 years.
And then they put this to bed. This has been an overhang on the stock for a while.
It’s very—like, even if overall they think it’s unfair, they didn’t admit fault, right? Even if they think it’s unfair, it’s not right, and the measurement’s all wrong, large corporations are political animals. This is where the politics are going, and from a business-management-analysis perspective, it’s very smart.
They’re getting ahead of it. They’re putting it entirely to bed. They got to negotiate it around their preferred parameters.
Mm-hmm.
They get to layer on this pretext: “Oh, sorry, we really have to profile you because the age requirement requires us to. It’s so sad.” If you’re going to get there, it’s best to get there on your terms, and that is kind of what Meta did.
Yeah, I agree. The only note that I would add on the potential for legislation is that you're right: betting on Congress getting its act together in this area and passing any legislation is usually a bad bet. However, I do think you could overcome some of the First Amendment concerns because you're talking about children and child safety as a compelling interest alongside the First Amendment concerns. I don't know exactly how that would be resolved, but I do think that there's political will to go in that direction. So it'll be interesting to track over the next several years here.
As far as the competition and Meta's competition, Mike Isaac on Twitter shared an open letter that Meta has written to fellow social media giants YouTube and TikTok, imploring them to implement these changes as well. That letter ran as a full-page print ad in The Washington Post, the Los Angeles Times, and The New York Times on Thursday. Isaac noted that Snap was not even mentioned, which is an amusing indication of where that platform stands. Many have compared that to Don Draper saying that he'll no longer represent tobacco companies. Do you like that comparison for Meta there?
It's one of those things: make lemonade out of lemons.
Right.
We are the leaders in this. We've done all these sorts of things.
Just like Don did.
Have you thought about whether YouTube and TikTok would ever comply with Meta's demands there and make these changes unilaterally themselves without prodding from litigants?
I think there's a good chance they will. Basically, you're the lawyer; you can tell me. This case is not precedent-setting like Supreme Court precedent, but there's a whole other arena of the political culture around court cases where this is de facto precedent-setting. And there were probably 1,000 lawsuits filed yesterday.
Courts dealing with these novel issues are going to look at how other courts handled this. How did it get resolved? So it's going to be a pretty persuasive tentpole that people look to.
Right. And so probably the question facing Google and TikTok is, do we want to wait for the inevitable lawsuit that is probably going to be settled on the exact same lines as this, or do we want to—
Do we get ahead of it? Yeah, and go there ourselves. Okay. Well, we'll see.
So we'll see. I could imagine—my guess, my instinct is that Google will move first—
Mm-hmm.
—and TikTok will try to skate by for a while. But then again, TikTok has been very eager to be seen as following the law. Yeah, I'm going to reverse that. I think maybe TikTok will move first.
Okay.
I don't know.
Well, time will tell. Final note, Sagar Ejati tweeted on Wednesday, “Is there any good argument for why the Meta changes for teens shouldn't be universal for all adults?” I wouldn't have a problem if they went in that direction for reasons stated previously. If we're nominating classes of people who need to be regulated, though, I would like to nominate boomers and have their social media use regulated before all of society.
Right. We do need age limits. The age limits are just all in the wrong direction.
Exactly. Anyone over—
Kids are fine.
—65: strict limits. All right, and that is the end of the free preview. If you'd like to hear more from Ben and I, there are links to subscribe in the show notes, or you can also go to sharptech.fm. Either option will get you access to a personalized feed that has all the shows we do every week, plus lots more great content from Stratechery and the Stratechery Plus bundle. Check it out, and if you've got feedback, please email us at email@sharptech.fm.