☀️☕️ Social Media Addiction by Design

📝 Focus

• Social Media Addiction by Design

📊 In the Markets

• Will GM cave in?

📖 MoneyFitt Explains

🎓️ Strike that!

📝 Focus

Social Media Addiction by Design

A federal judge in California said that Google, Meta, Snap, and TikTok may have to face allegations that their platforms harmed young Americans' mental health with addictive features built into how they operate and serve content, rather than the content itself. 

This could mark a significant challenge for the tech industry as they face a nationwide legal assault on mental health-related claims. Nearly 200 individual cases against these tech companies allege vast harm to children through algorithmic rabbit holes, image filters encouraging eating disorders and endless content feeds. 

Big tech has so far hidden behind Section 230 of the Communications Decency Act (CDA), a 1996 law protecting websites from certain content-related lawsuits. 

..... ▷ Section 230 was passed in response to concerns about the potential for harmful content posted online. 

It was designed to strike a balance between protecting users from such harmful content and allowing the internet to flourish as a platform for free speech and innovation.

Section 230 is often referred to as "the 26 words that created the internet" because it provides immunity for platforms from being treated as the publisher or speaker of third-party content. 

It also gives platforms immunity from civil liability for removing or restricting content that they deem to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable. 

This has allowed website platforms to host a wide range of content, including user-generated content (and comments sections), without fear of being sued.

However, Section 230 has also been criticised for allowing website platforms to host harmful content, such as hate speech, misinformation and disinformation.

The law is 27 years old and A LOT has happened since then, not least the 10,000-fold increase in computing power and the influence of social media and tech in general in shaping public opinion around the world.

..... ▷ Dozens of states have filed federal lawsuits against Meta, claiming it knew its platforms harmed kids (see the “Facebook Papers” of 2021 and whistleblower Frances Haugen’s testimony.)

The judge expressed scepticism regarding arguments to dismiss all claims and industry lawyers' assertions that tech companies have no obligation to ensure platform safety for children. 

She pointed out potential limits of Section 230, suggesting that some claims might survive, emphasising that the burden falls on tech platforms to prove why cases should be dismissed.

..... ▷ This seems to echo a ruling by an LA judge that big tech defendants can’t use Section 230 to dismiss allegations revolving around allegedly defective design features since they don’t concern third-party content.

Thousands of US plaintiffs have sued social media companies, essentially claiming that those platforms are defective products that have lead to eating disorders, anxiety and suicide, among other mental health injuries. 

Which other powerful organisations in huge industries knew of the dangers, especially to children, of the highly addictive products that they were peddling, but sought to cover it up as long as possible until public pressure and the courts eventually intervened? Yup. Big Tobacco!

..... ▷ A comparison with Big Tobacco (again):

1. Public Health Concerns: Both situations involve industries with products or services that have raised significant public health concerns. 

Tobacco has long been associated with various health issues, particularly lung cancer and respiratory diseases, while social media and tech companies are facing allegations related to the impact of their platforms on mental health, particularly among young users.

2. Addictive Qualities: Tobacco products have been criticised for their addictive qualities due to nicotine content. 

Similarly, social media platforms have been accused of using features and algorithms that create addictive behaviour, keeping users engaged for extended periods.

3. Legal Actions: In both cases, legal actions have been taken against the respective industries. 

The tobacco industry faced a wave of lawsuits in the late 20th century, resulting in the Tobacco Master Settlement Agreement in 1998. 

Tech companies are currently dealing with a growing number of lawsuits related to mental health impacts, particularly among children and teenagers (above).

4. Corporate Responsibility: There is an ongoing debate about corporate responsibility in both situations. 

Tobacco companies were accused of downplaying the health risks associated with their products, while tech companies are under scrutiny for their role in not adequately addressing the potential harm their platforms can cause to mental health.

5. Regulatory Oversight: Regulatory bodies have become more involved in both situations. 

Tobacco products are subject to various regulations, including warning labels and restrictions on advertising and sales to minors. 

Tech companies are facing calls for increased regulation to address issues related to user safety, privacy, and content moderation.

6. Public Awareness: Both issues have gained public awareness and attention, leading to advocacy campaigns and public discussions on the potential risks associated with the products and services provided by these industries.

📊 In the Markets

Asia-Pacific markets rebounded on Friday, led by HK and China, with Australia bouncing from a one-year low in the previous session.

But Indonesia's J&T Express, a logistics provider, saw a 1.33% drop in its shares on its debut in the second-largest IPO in Hong Kong this year. The IPO was scaled down due to weak demand.

Core consumer prices in Tokyo (including oil but excluding fresh food, and typically a lead indicator of nationwide prices) rose a faster-than-expected 2.7% in October compared to a year ago. Headline inflation came in at 3.3% for October, faster than the 2.8% seen in September. The Bank of Japan meets on Monday and Tuesday for its monetary policy meeting.

But European stocks closed lower, with most sectors and markets down. UK government-owned “High Street bank” NatWest (bailed out -as RBS- in 2008 for £45.5 billion) closed down 11%, having been off 18% at the open, on weak third-quarter results showing a lower net interest margin. The UK’s Financial Conduct Authority said Friday morning it had found “potential regulatory breaches” in its report into the banking account scandal that led to the sacking of the CEO.

French drugmaker Sanofi lost €20bn in market value as its shares collapsed 18% after cutting its 2025 profit target. It also announced it was possibly spinning off its consumer unit from the core drugs business.

Sanofi’s plan to spin off its consumer health unit is similar to Johnson & Johnson’s creation of Kenvue to “Realize the Extraordinary Power of Everyday Care” with brands like Tylenol, Band-Aid and Listerine. Sanofi’s includes Allegra, Rolaids, Selsun Blue and Zantac.

Both companies have / will split off their consumer health divisions to free up resources for developing next-generation therapies for cancer, rare diseases and other ailments.

US stocks closed mostly lower though Nasdaq managed to bounce, led by tech names Amazon.com, Apple and Meta (above).

The Commerce Department's highly anticipated Personal Consumption Expenditures (PCE) report and the core PCE, the Fed’s preferred measure of underlying inflation, picked up to a four-month high in September as consumer spending picked up. The Fed is still expected to keep its key interest rate unchanged at the upcoming policy meeting in November.

The S&P 500 has experienced a more than 10% decline from its year-high in July, officially entering a market "correction” for those who care about such labels. The drop was driven by concerns about interest rates, geopolitical tensions, and generally lacklustre third-quarter company results. The first seven months of the year were surprisingly strong due to AI enthusiasm and hopes that the Fed would soon end its rate hikes.

Will GM cave in?

The United Auto Workers (UAW) union reached a tentative agreement with Stellantis, referring to the deal, as it did with Ford last week, as a significant “victory.”

The deal involves reopening a closed Illinois assembly plant and various benefits for the UAW.

The Stellantis deal aligns with the one reached with Ford, offering substantial pay raises and benefits to counter inflation's impact on workers' paychecks and concessions made after the GFC to help keep the automakers alive.

..... ▷ As with Ford, the deal reverses many of the concessions the union agreed to in a series of contracts since 2007 when the entire auto industry was on its knees and teetering on the verge of bankruptcy.

However, it does fall short of the 40% pay hike, 32-hour workweek and return of defined benefit pensions initially sought.

Shawn Fain must have taken good notes during Negotiation 101.

..... ▷ But the expansion of the GM strike to include an engine plant in Tennessee that supplies nine factories producing many of its most profitable vehicles could halt GM's large pickup truck production and ratchet up its financial pain.

GM alone among the Big Three reported significant financial losses due to the strike.

..... ▷ The strike against General Motors (GM) now involves nearly 4,000 GM factory workers, prolonging the last remaining auto strike among the Big Three since the targeted strikes began seven weeks ago.

At its height, it included more than 45,000 workers from GM, Ford and Stellantis at eight assembly plants and, importantly, 38 parts-distribution facilities across 22 states.