Monopoly Round-Up: A Judge Condemns Facebook for Enabling Mass Sexual Exploitation of Kids

BIG by Matt Stoller

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Monopoly Round-Up: A Judge Condemns Facebook for Enabling Mass Sexual Exploitation of Kids<br>Big tech is in a lot of trouble, as the law, the financing, and the American people turn against them. Plus, Amazon's antitrust troubles, and a crack in the electric utility high billing scam.<br>Matt Stoller<br>Aug 10, 2026<br>∙ Paid

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Lots of monopoly news, as usual. Paramount had another setback in its merger plans, there was some comical villainy involving Mark Zuckerberg’s yacht, and the state of New Jersey just filed a ground-breaking monopoly lawsuit against Amazon over driver wages.<br>Before getting to the full round-up, I want to discuss some events this week in the courts that demonstrate the increasing vulnerability of big tech and AI firms. There are three separate ways the position of these firms is weakening. Their legal protections are fraying, their financial position is more fragile, and the politics for them are turning downright toxic.<br>We’ll start with the legal piece, because that’s the part mostly not being covered by the press. For years, the main thrust of the assault on big tech came via antitrust law, the argument being these companies are monopolies thwarting competitors and extorting customers. But over the past few years, it seemed like the antitrust campaign against big tech ended in failure. One judge ruled that Meta is not a monopolist, and a different judge ruled that Google is a monopolist, but then mandated irrelevant and minor penalties. And there are rumors the DOJ case against Apple may settle.<br>But it increasingly looks like these legal setbacks were a pause before a much larger assault on their power. It’s just that it may not come through the antitrust channel, but by taking on the tyranny of unregulated algorithms. Here’s what I mean.<br>Much of the consumer internet-economy operates on top of feeds that draw one’s attention. Meta, TikTok, and YouTube all have high profit margins because they use feeds that require little human curation, and thus have low operating costs. But just because outlays are low for the companies themselves doesn’t mean there aren’t costs, it just means that they are borne by users and communities, in the form of bullying, sex trafficking, addiction, polarization, shorter attention spans, et al. It’s like pollution, where a company pours chemicals into a river, which doesn’t cost the company anything but does poison entire communities downstream.<br>For decades, tech firms have lobbied to stop states and the Federal government from regulating them. At the same time, they have argued in courts that algorithms are protected by Section 230 of the Communications Decency Act, which prohibits companies from liability for third party behavior. Algorithms are also a form of speech, and thus are shielded from state action by the First Amendment. In cases such as Netchoice vs Moody, tech firms have claimed there is a constitutional prohibition against regulating them.<br>Two legal decisions this week suggest big tech will soon lose its legal protections. First, in California, Judge James Donato ruled that engagement-based algorithms are not protected by the First Amendment. Second, in New Mexico, Judge Bryan Biedscheid held Meta liable for being a public nuisance in causing a youth mental health crisis through its engagement-based algorithm, including significant sexual exploitation, “sextortion,” and sex trafficking. Together, these cases suggest the high-margin big tech business model of social pollution is ending.<br>We’ll start with California. On Wednesday, Judge Donato ruled that a state law regulating addictive social media feeds, the Protecting Our Kids from Social Media Addiction Act, can be enforced. Google, Meta, and TikTok sued, arguing that the law is unconstitutional and violates the First Amendment. Their feeds offered to users, they argued, were “expressive.”

Judge Donato disagreed. In his order, he wrote that relying on “algorithms’ number-crunching capabilities” to serve engagement-bait is not an attempt to express an idea, nor is it speech. It is akin to a “dumb pipe,” like a telephone wire, and thus it can be regulated. Content moderation, by contrast, is expressive and thus protected, but content moderation and engagement algorithms can and should be distinguished. Donato is offering one of the more sophisticated opinions fleshing out how the Supreme Court might handle algorithms and the First Amendment, and one that looks quite reasonable.<br>If regulation of engagement algorithms is constitutional, then what might that look like? In New Mexico, we got a partial answer. Judge Biedscheid has been overseeing a case about the threats of social media to children. It was partly a jury trial, to decide monetary damages on violations of the New Mexico Unfair Practices Act. That was decided months ago, with the jury holding Meta...