How YouTube Gets Dragged Into Meta's $18.1B Teen Restriction Settlement | Mark Stenberg, Senior Media Reporter at Adweek

The $18B Question For Streaming

Tim Rowe, State of Streaming 0:44

Meta's recent $17.1, $18.1 billion settlement, depending how you slice it, threatens to drag YouTube into the exact same youth restrictions, a move that could significantly slash YouTube's massive mobile share of time. But what if teen screen time caps wipe out millions of low margin mobile minutes? Could it actually solve YouTube's biggest financial mismatch by closing the gap between viewer attention and ad dollars? And where do multi-billion dollar youth advertisers in fast food, gaming, and fashion move their budgets when that mobile supply shrinks overnight? Welcome back to this day of streaming podcast. Today I sit down with Mark Stenberg, senior media reporter at Adweek, to analyze the real ripple effects of Meta's landmark settlement. We unpack what happens if YouTube gets hit with matching teen usage limits, how agencies targeting youth-centric categories in gaming, apparel, and QSR are reacting, and why a drop in mobile watch time might finally force buyers to align their ad dollars with YouTube's living room dominance. Make sure to hit that subscribe button right now so you stay ahead of the changing streaming media landscape. Let's jump into the conversation.

Breaking Down Meta’s Settlement Terms

Tim Rowe, State of Streaming 2:04

Mark Stenberg, you've got a piece out. Just recently, Meta was found, I don't know if we'd say liable. They kind of admitted that they would go along to get along a little bit. This big meta 17 billion dollar settlement. I say big. It's big in the relative context of settlements like this, but Meta is a trillion dollar company. Can you take us through the details, Mark Stenberg? Welcome to the State of Streaming podcast.

Mark Stenberg, Senior Media Reporter at Adweek 2:31

Yeah, thank you so much. I think that you're characterizing it correctly as like this is in some ways a win for Meta. I think its stock went up after the settlement was announced. It was a coalition of state attorneys general who were suing Meta, and they were asking for $200 billion. Okay. And so this was a settlement and it was $12 billion plus a conditional $5 billion, which we'll probably talk about a little bit later. And then $1 billion paid out to sort of the Texas attorney general himself. So it's a roundabout number total of 18, but $12 billion, certain cash on the table. But even that is spread over 10 years. So we're looking at about $1.2 billion a year for a company that just made $60 billion in its last quarter, right? So from a financial perspective, it's not nothing, but it's certainly not crippling the company. Obviously, the more interesting element is the conditions and the new sort of teen restrictions that Meta is going to have

Teen Safeguards And Media Buyer Reactions

Mark Stenberg, Senior Media Reporter at Adweek 3:28

to implement. And outside of the money, the question that I was kind of exploring in the piece is once Meta agrees to these conditions or following its can its agreement to it, they basically include restrictions like reduced notifications during school time, sort of dark mode after midnight, a cap on total usage over two hours, various pretty commonsensical measures to try to get teens into having a healthy relationship with social media. The big question that I was bringing to media buyers and marketers was is this going to affect your strategy as it relates to buying on those platforms?

Tim Rowe, State of Streaming 4:08

Yeah, tell us what they said.

Mark Stenberg, Senior Media Reporter at Adweek 4:20

And by and large, the answer is no, but we're going to keep an eye on it. And we've been writing some version of that story for the last 10 to 15 years. And, you know, fortunately or unfortunately, depending on whose perspective you're taking, most of the media buyers I spoke to said that this isn't going to change anything for them in the short term. The sort of more qualified answers were, well, if the other social platforms also end up implementing these safeguards, which would include YouTube, TikTok, and Snap primarily, then that could be a big difference. If if the whole social media ecosystem adopts these safeguards for teens, that will obviously have a bigger impact on the space than if just, you know, Facebook and Instagram have to implement these. Some of the other findings I heard from marketing executives were the total population of meta users that this impacts is relatively small. I think Meta itself said it's less than 1% of its revenue comes from this demographic. So it's not a massive portion of the meta community. I mean, it's a tiny age group. So if you take any specific age group, it's not going to be an outsized portion and of itself. But so it's not impacting a broad swath of meta users. That's another element. And in fact, it's certainly younger folks, right? And so some of the media executives I spoke with basically said, look, if you are working for a brand that's targeting older demographics, this isn't really going to affect you at all. But if you're working for brands that are in specific categories that often target younger consumers, it was like fast food, things like that, this might have a bigger impact on you, or it's certainly something to keep an eye out for. But most of the people I spoke with said, we're going to establish some benchmarks and we're going to monitor how, you know, spend looks over the next six to 12 months. And if we start to see abnormalities, we know sort of what the root cause of it is. But in all likelihood, I imagine that this is going to reduce a fraction of the total available inventory for a demographic that is it's not unvaluable. People are always trying to, you know, find and target new users to develop an affinity for your brand, but they don't have the same kind of disposable income that basically any other peer group has. So it's more that this is an interesting legal precedent and something to watch on that front, and could usher in a sort of new era for what it looks like for teen users of social media. That's the real thing to watch.

Why Meta Wants Ecosystem-Wide Rules

Tim Rowe, State of Streaming 6:50

And it's something we've been keeping an eye on from a say streaming perspective. Australia earlier this year banned social media for under 16. I think 10 platforms were impacted by the Australia ban. This specific case was going after meta, I believe it was on three grounds the collecting of data for miners, the addictive product for miners. And then I know that this has been big for the states, for parents, for lobbyists, the algorithmic feed, which that was not impacted. It was the collecting data and the addictive product that essentially fell into the settlement, it seems. And if I'm not mistaken, one week into a two-month trial, this was a little bit of a public perception band-aid, it would seem for Meta to get this done quick out of the news cycle. And they took hostages with them. They they said, Hey, we'll pay that additional five billion if YouTube, TikTok, and Snapchat all go along and kind of say that they're doing the same thing. Is that right?

Mark Stenberg, Senior Media Reporter at Adweek 7:53

Yeah, I love I love that uh mental image because it really is like, you know, if we're going down, we're all going down kind of thing. The language that their lawyers and their legal team continue to return to was basically this is an ecosystem-wide problem. And users today, young users are hopping between a universe of apps. And it is not just Instagram and Facebook. In fact, I love social media. I mean, basically every company does this, but social media companies have perfected this. Depending on what angle you're taking, they're either a little old me, you know, just not me. Nobody uses us. And then on the other hand, when they're like in close rooms with hand marketers, they're like, nobody can resist when we show kids advertisement. So it's kind of like whatever narrative serves them the best. But under the scrutiny of this legal attack, they start basically like puffing up their competitors and people are spending way more time on TikTok. This age group, like they're on YouTube, they're barely using Facebook, you know. So all of a sudden they're like, You got the wrong guy here. So it's very funny the way that they, you know, tell whatever story is most uh helpful for them at the moment. But that is the general point, is like if you're if you're talking about teens and they're not that wrong. I mean, I don't know many teens on Facebook. Certainly Instagram is more surprising, right?

Tim Rowe, State of Streaming 9:08

Like we make the joke, like, right, just grand, it's our parents and grandparents. It's not it's not younger generations.

Mark Stenberg, Senior Media Reporter at Adweek 9:14

So I mean, that was the that was the the thinking there. It's like, look, if you really want to solve this kind of mental health crisis that social media is allegedly causing, you need to address all the major players in the ecosystem, not just us, which does make some sense. I'm not a lawyer. I don't know how you structure an agreement to have like conditional revenue based on the actions of other parties. That's a really interesting bit of like legal jujitsu. But, you know, I don't disagree with the general premise. And now, of course, they're running all metas, all running these ads that's like TikTok, YouTube, join us in protecting teens, which is like such a sly bit of work on their part. So the big question is what do YouTube, TikTok, and Snap

Could YouTube Face Teen Time Caps

Mark Stenberg, Senior Media Reporter at Adweek 9:59

do?

Tim Rowe, State of Streaming 10:00

And it's something that we're watching. There's a significant delta between the time spent on YouTube and the ad dollars. And some of that we speculate is from these younger audiences, largely driven by YouTube shorts. And then if we get into this from a media buying perspective, the CPMs on mobile are significantly different than on the large screen. So it's something that we're paying attention to because it could impact YouTube. But YouTube makes the case we're not social media, we are television. And earlier this year, they made that case to a jury and they found that that isn't the case, that YouTube and Meta, you know what, you're not that different from one another. So it's interesting to see how this has kind of unfolded. Does the fact that YouTube have it's it's largely based on a creator economy? And I think that that's something fundamentally different than maybe social media and and where that case, again, we're not lawyers, we don't know. We're just here to speculate and and talk about it and make interesting content and conversation for you. What's your take? Does YouTube get dragged down with this? Are they different?

Mark Stenberg, Senior Media Reporter at Adweek 11:10

I think that YouTube is different, but I think that those differences are continuing to disappear, right? Like on the one hand, you have Instagram launching Instagram television, right? So like you have the social platforms really trying to be on TV, and you have the TV companies maybe through microdramas increasingly trying to resemble social platforms. So whatever distinctions there are now, I don't think they'll they'll be around for much longer. But I do think YouTube specifically has never really been a social media. And in fact, I know YouTube, you know, sources who have who lament that internally. One of the biggest challenges YouTube considers itself to face is that they lack the sort of social graph that like other social platforms have. Like I always think it's really interesting. You watch YouTube really as a sort of solitary activity in many ways, even though it's mimics a television, you consume it similarly to how you consume a social media. So it's certainly somewhat of a hybrid, but I think that it will have a little bit easier of a time, especially compared to TikTok and Snap, making an argument that it is not identical to Meta and that maybe it, you know, should have some different rules that it needs to follow. But on the other hand, YouTube is so popular with kids and even younger than teens, right? Like we talk about like children, young children consuming vast quantities of YouTube and needing to have parental restrictions on that. So I think that YouTube has tried to be a little bit more proactive on that front. But I do imagine that like what we're witnessing now might come in different forms, but overall, I think we're seeing a sort of recalibration of people's relationships with social media. And social platforms are either going to make those changes electively or they're gonna make them, you know, at the hands of legislation, like we're seeing right now. But I wouldn't be surprised if YouTube either elects to take some very voluntary steps to basically kind of follow in Meta's lead and maybe, you know, avoid the bad press and partake in some of the good press of looking like a steward. But I would be surprised if it ends up looking exactly the same, just because people I think use those platforms very differently. And YouTube's already been somewhat proactive about being good with safeguards and allowing parents to be more proactive and monitoring what younger users are seeing. So sorry, long story short, I think YouTube does end up changing some of its policies to be more teen and child friendly, but I don't think it ends up looking exactly the way that it is with meta.

Creator Economy Leverage Keeps Rising

Tim Rowe, State of Streaming 13:45

Seems like through this all and and kind of coming back to the where does YouTube's content come from? Largely it's from the creator universe. We've seen creators getting more leverage, YouTube recently announcing, hey, we'll pay you to not talk to Netflix. We've seen huge talent like Jay Shetty, Tom Segura. There's all sorts of MA and and IP is the big conversation around creators. Do you think this gives the creator economy more leverage in how it flexes and throws its weight around platform to platform?

Mark Stenberg, Senior Media Reporter at Adweek 14:20

That is such a good question. I think as it relates to these safeguards, does that have a direct impact on the leverage of creators? I'm not sure. I don't see an explicit connection in and of itself, but I also see, at least not off the bat, but I do see the the leverage of creators growing for completely separate reasons. And I see that that trend line is up and to the right. I think I wrote a big cover story about this a month or two ago that was about how the creator economy, for all these various reasons, has sort of hit this inflection point and it's reached sort of a point of maturation at which the biggest creators are beginning to act like media companies. The most popular YouTube channels are beginning to function as individual pieces of IP or sort of media operations on their own. And I think that the biggest battle obviously here is sort of between YouTube and Netflix, although Spotify is an interesting kind of dark horse, I think, in the in the contest. But I think that the talent wars, as they're as they're now being called, are also going to continue to basically be win in the sales of creators. I think I've joked to people. If you ever want to start a podcast, it's the best time to do it. You know, they're signing people left and right. I feel like it's those like sort of uh NBA contracts where like you've never seen the guy, but like, you know, you're signing him based on just what you heard, kind of thing. I think that the fight for prominent UGC creators is going to continue to accelerate. And I think that we're going to see more fast platforms getting involved. I think we're going to get see more institutional capital getting involved. I mean, this is very much, you know, up your alley. And I know you had somebody on here recently who was talking about this. I think that the evolution of creators into sort of standalone media companies and the evolution of channels into IP in and of themselves is going to be kind of the dominant trend in the next year or so that I've I've got my eye on. And how do podcasts fit into that? You know, it's such a fascinating time. And that's why I go back to kind of what I said earlier, where it's like any distinctions we have between the platforms now will just continue to blur to the point where in a year it's like Spotify's introducing video, YouTube's introducing podcasts, Netflix is introducing music. You know, they're all they're all going to be offering the same thing in

Microdramas And The Next Mobile Format

Mark Stenberg, Senior Media Reporter at Adweek 16:45

12 months.

Tim Rowe, State of Streaming 16:46

Do you think there's an opportunity? Is the market at a place of maturation? You mentioned obviously Netflix, Spotify, YouTube. Is there room for a new platform that could come in and maybe disrupt some of that?

Mark Stenberg, Senior Media Reporter at Adweek 17:01

I feel like, I mean, you've talked about this on some of your previous pods. I've really lately gotten super interested in the micro drama space because I do think that that is this really interesting blend of the addictiveness of social media combined with the compelling IP of Hollywood, or what I'm hearing more and more is IP developed specifically for microdramas. So then it's like if Hollywood storytelling continues to be compelling and the sort of format innovation of social media scrolling is, you know, addicting to a degree that leads to $17 billion settlements. I think some combination of those two things could really be a massive unlock and like a huge sort of snake in the grass for this whole space. Who owns that, right? Like who's going to dominate the micro drama space? Is it going to be kind of an incumbent? Like you see TikTok moving into that space really well. You could see a Netflix or Disney moving into that space. But what I'm really interested in is who is going to be the TikTok for the micro drama sort of space? Like, what's that? Is it going to come out of China? I mean, that's like a high likelihood, honestly. Or are we going to just because the micro drama genre is massive in China and has been for years? Okay. It's one of those things where people always tell me it's big in China. It's going to be here one day. And I'm I've heard that about so many different things that I'm kind of skeptical when I hear that argument. But I do think that it's going to like kind of cross the pond. And I spoke to a company based in Tel Aviv the other day that's doing some really interesting things on that front. Spoke to a company based out of Ukraine, actually, that's doing some interesting things on that front. I don't know yet that we have like a US micro drama company. If it's out there, please listen to me and or listen to this and let me know. Send Mark an email. Yeah. But I think that that's a really interesting space because it it's like it's kind of a step forward innovation. Like it's obviously kind of a combination of two things that we know already. But I think that, man, if you take like the addictiveness of mobile scrolling and you plug in even better IP and you get people watching TV and like bite-sized chunks on their phone, that could be a huge C change. So I'm excited to keep an eye on that space.

Tim Rowe, State of Streaming 19:19

It's funny. I was getting a coffee this morning and the barista commented that she was tired. I said, Well, were you up all night playing video games? Because you know, I've been playing play a lot of Fortnite recently. Uh and she said, No, I was scrolling social media. And that's probably the the most common response. But as you're saying that, right. That's it's just replacing the behaviors already built in. It's just what are we scrolling? And if it could be a little bit better, and it was slightly better produced, and it was a little bit more relevant, and something that was you know captivating and entertaining, sure, these addictive properties, you know, could really exacerbate this.

Mark Stenberg, Senior Media Reporter at Adweek 19:58

There's like, and there's a lot of the the company out of Tel Aviv, which I think is like not fully launched yet, is using AI to take pre-existing Hollywood IP and then cut, and so they do licensing deals with studios, they cut it down into its most engaging segments, and they effectively speed up, you know, a half-hour television show into you know five minutes worth of 10 clips or something like that. So that's like a way for Hollywood to kind of get into this space too, because they get some revenue share. Maybe you fall in love with a show from their back catalog that they didn't have streaming anywhere. Then you go to the streaming service. So like Hollywood could get in on it. But what's really crazy to me is this idea of like creating original IP for microdramas rather than like repurposing old IP. You know, I it's so much like people make a lot of jokes about Quibi. It really does seem like Quibi probably was just like six years ahead of its time. Bad timing. Yeah. It's also interesting to me because like I was talking to one of these guys and they were like, streamers are trying to figure out their mobile offering. I was like, what do you mean? Like, I have an HBO app, I'll watch, I'll watch like a Netflix show if I'm on an airplane. But I was like, it they're right. I don't ever really watch, you know, streaming television on my phone because the format's just not right. It has to be quicker, it has to move at the pace of all the other things that you do on your phone. And so it's like, oh, I mean, maybe that is the unlock. You just you take this thing that people love and you make it swipable.

Tim Rowe, State of Streaming 21:20

Give me a Sopranos micro drama. I would love to re-watch, you know, in bed late at night and just scroll through all of the seasons. That that sounds like fun to me.

Mark Stenberg, Senior Media Reporter at Adweek 21:32

If I'm being you know honest with you though, like I have a lot of friends in like the creative community who are like having trouble holding down their gag reflex when I talk about these things because it it literally is like it's like you got a bunch of like bros in a room and they're like, What if we took all the boring parts out of movies? And it was just like sex scene, action scene, you know, and you watch these things and you're like, yeah, they're just speeding it up so you get to the good stuff quicker. And I'm like, these showrunners like must be like turning over in their graves, like it all feels like it's out of an episode of 30 rock to me. Like these things that were supposed to be satire are actually true, but so funny, Mark.

Where To Follow Mark And Final Takeaways

Tim Rowe, State of Streaming 22:12

If there's someone listening who thinks they might have a lead or a tip or maybe more information that would be helpful to some of the things that you're working on, how do they get in touch?

Mark Stenberg, Senior Media Reporter at Adweek 22:22

Yeah, you can find my work on Ad Week. I have a newsletter that goes out for Ad Week every Wednesday called On Background. It's like my rundown of everything going on in the industry that week. And you can find my email very easily, and you can find me on social media, Mark Simberg3, on most platforms.

Tim Rowe, State of Streaming 22:39

Excellent. We'll make sure it's all easy to find and close by. Mark, we'll have to do a follow-up and see how this all plays out in a few months.

Mark Stenberg, Senior Media Reporter at Adweek 22:47

Yeah, I would love that.

Tim Rowe, State of Streaming 22:47

Thank you so much, Tim. This has been a blast. Absolutely. If you found this conversation to be helpful, please share it with a colleague or a client and start a conversation yourself today. We'll see y'all next time.