Meta is withholding $5.3 billion unless TikTok and YouTube adhere to its regulations for teens.

      Meta will withhold approximately $5.3 billion from its settlement regarding teen safety. The release of these funds is contingent upon TikTok and YouTube adopting similar measures and contributing equivalent amounts. The company outlined this framework in a newsroom post on Wednesday, just hours after finalizing the settlement with the states.

      Meta estimates the total settlement amount to be around $18 billion, to be disbursed in annual payments over ten years. Previous court documents indicated a maximum settlement of $16.68 billion. The company positions this agreement as establishing a new standard for the industry, emphasizing that it cannot achieve such standards unilaterally.

      As for the distribution of funds, participating states are expected to receive approximately 70% of the total, amounting to around $12.7 billion over the decade. Meta asserts that these funds can support online safety initiatives for youth as well as other state priorities. The remaining 30%, about $5.3 billion, is contingent on two specific conditions: first, YouTube and TikTok must implement a one-hour daily usage limit, night mode, and age verification measures; second, they must each pay an amount that matches the 30% figure. Half of the withheld funds will be linked to YouTube's payment, while the other half will correspond to TikTok's.

      Meta anticipates incurring a legal expense of about $10 billion in the third quarter, which falls outside the expense range it previously mentioned during its second-quarter earnings call. The company's guidance from July remains unchanged.

      If TikTok and YouTube sign on, the terms of the agreement become stricter. Most provisions last for ten years, but the daily time limit and night mode start with a five-year commitment. If industry peers participate, these obligations will extend to ten years, and the parameters will also tighten. The daily limit would decrease from two hours to one hour per app, and night mode would adjust from midnight to 6 a.m. to 10 p.m. until 7 a.m.

      Pending judicial approval, the protections will automatically apply to users under 18 on Instagram and Facebook in the relevant states and territories. The default daily time limit is set at two hours, calculated cumulatively across both platforms and covering multiple accounts where applicable. Teens can disable this setting only with parental consent.

      Night mode restricts access to the apps from midnight to 6 a.m., during which time teens cannot post or navigate feeds, stories, explore, or reels. School mode silences notifications between 8 a.m. and 3 p.m., except for direct messages and alerts concerning account security or safety. Direct messaging is exempt from all three restrictions. Users will receive prompts after 15 minutes of continuous use, as well as at 60 and 90 minutes, which Meta states are intended to promote intentional app usage.

      Regarding changes to the feed and filters, teens will have the option to select a non-algorithmic feed as their default setting, which won't be personalized by Meta's recommendation systems. Parents can mandate this preference. Additionally, teens can disable auto-play, and parents can do the same. By default, likes and reactions will be hidden on both their own posts and those of others.

      Meta will prohibit teens from using extreme makeup filters and already blocks access to cosmetic surgery filters. The new content settings for users aged 13 and above were discussed when Meta implemented them globally in June.

      Alongside the announcement, Meta issued an open letter to TikTok and YouTube, encouraging them to adopt this framework. C.J. Mahoney, Meta's chief legal officer, noted that while the framework is a positive direction for the industry, it relies on collaboration from peers. He emphasized the need for a comprehensive solution, as teens often migrate between different apps when faced with restrictions.

      As of now, neither TikTok nor YouTube has publicly responded. Meta’s announcement includes a disclaimer regarding forward-looking statements.

      Meta characterizes the agreement as being supported by a bipartisan coalition of 52 attorneys general across various US states, territories, and the District of Columbia. The announcement lists all participating regions, from Alabama to Wyoming, including Puerto Rico, American Samoa, and the Northern Mariana Islands. The federal trial in Oakland that led to this settlement involved claims from 29 states, and this settlement was reported earlier on Wednesday, noting a maximum of $16.68 billion. Meta also intends to continue advocating for legislation that mandates app stores to verify ages and obtain parental consent before allowing teens to download apps.

      An independent auditor will assess Meta's adherence to the agreement and provide annual reports to the states for a period of five years. Additionally, the agreement establishes an independent social media research foundation, to which Meta plans to share user data for research purposes focused on teen well-being. In 2024, Meta introduced Teen Accounts and cites this initiative as foundational to the terms described in the post.

      However, none of these measures will affect European users, as the settings are applicable only in