Zuckerberg denies Instagram was built to hook children as internal documents show harm
Meta CEO Mark Zuckerberg testified in a Los Angeles federal court defending Instagram against claims it was deliberately designed to addict children and teens. The plaintiff, identified as KGM, says she became addicted after starting Instagram at age nine and experienced worsening depression, anxiety and suicidal thoughts; lawyers allege she sometimes used the app more than 16 hours a day. The trial examines whether features such as infinite scroll, push notifications and personalized recommendations were intentionally engineered to increase youth engagement and whether Meta concealed internal research showing harm. Unsealed internal documents (made public in November 2025) indicate Meta research from 2017–2018 found signs of social media addiction and that stopping use reduced anxiety and depression; employees warned the product “exploits weaknesses in human psychology.” Documents also show efforts to grow teen usage (Zuckerberg called increasing teen time a “top goal of 2017”), Instagram pushed 1.4 million potentially inappropriate adult accounts to teens in one day (2022), and features like “school blasts” targeted students during class. Meta rolled out default minor protections only in 2024 and recently changed moderation policies shortly before the trial. The outcome could affect roughly 1,600 similar lawsuits nationwide and lead to large payouts or major product changes.
Bearish
This legal development is bearish for crypto-adjacent and social-media-linked tokens and services for several reasons. First, large adverse rulings or settlements against Meta could prompt broader regulatory scrutiny of major tech platforms, increasing compliance costs and reducing investor appetite for risk assets tied to consumer tech. Second, the case highlights reputational and operational risks around data use and recommendation algorithms — core technologies also used by many web3 projects — which may pressure tokens associated with social- or attention-focused platforms. Third, market sentiment often reacts negatively to legal uncertainty: potential liabilities affecting Meta (and precedents for other platforms) can reduce ad spend, slow user growth initiatives, and lower revenue forecasts, creating spillover risk into crypto markets, particularly tokens tied to social tokens, creator economies, or platforms planning large user acquisition. Short-term impact: increased volatility and risk-off flows as traders reassess exposure to tech-adjacent tokens; correlated altcoins may drop on risk-off sentiment. Long-term impact: if enforcement or fines materially change platform economics, projects that rely on integrations with major social platforms may see slower adoption and valuation pressure. However, the effect on core crypto (BTC, ETH) should be limited and mostly sentiment-driven unless the litigation triggers a systemic ad-market shock. Historical parallels: tech legal/regulatory shocks (e.g., Cambridge Analytica fallout, FTC actions) produced short-to-medium term risk-off behavior in risk assets and pressured stocks and related tokens tied to ad revenue or user growth models.