No Mercy / No Malice: Little Tobacco Moment

As read by George Hahn. https://open.substack.com/pub/profgmedia/p/little-tobacco-moment Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  Hogging seats on a crowded train, not saying excuse me, watching videos on your phone with no headphones in. Sometimes it feels like we don't know how to act anymore. What we have been seeing increasingly is people breaking rules. Why should I play by the rules if nobody else is going to do that for me? This week on Explain It To Me, how to mind your manners. New episodes Sundays, wherever you get your podcasts.

• 0:31George Hahn?

  I'm Scott Galloway and this is No Mercy, No Malice. Meta's $17 billion social media addiction settlement is being called a big tobacco moment. It isn't. It's another Meta win. Little tobacco moment, as read by George Hahn.

• 0:59George Hahn?

  We've been played again. Last week, 47 states and the District of Columbia settled with Meta, resolving claims that the company had designed addictive algorithms targeting minors, violated youth privacy, and endangered children. The company didn't admit to any wrongdoing, but it agreed to pay up to $17.1 billion in penalties and make changes to its products. Texas settled separately on the same day for $1 billion and similar terms. The markets shrugged off the settlements, however, with Meta's shares rising 1% on

• 1:42George Hahn?

  the news. For those keeping score at home, a 1% increase in market cap on a $1.4 trillion company means the settlements, breaking the fever of uncertainty, paid for themselves. I often call Meta "the big tobacco of the attention economy." Tobacco destroys individual lungs and pollutes the immediate airspace. Meta's cancer metastasizes across our entire society. The conventional wisdom says this settlement is Meta's big tobacco moment.

• 2:19George Hahn?

  Finally, justice. Bullshit. This is the Meta knife, thrust a foot deep into the West's corpus, pulled out a centimeter. Let's start on a positive note. A bipartisan group of state attorneys general took action against a harmful organization run by amoral people. Disgusted by the company's scant regard for child safety, but evidencing some measure of self-awareness, one Meta employee acidly noted, "Targeting 11-year-olds feels like tobacco companies a couple decades ago. Others likened their products to drugs and themselves

• 3:04George Hahn?

  to drug dealers. It's great that state AGs acted, but that it fell to them shows just how feckless Washington is." The settlement calls for changes to Meta products, though Meta began introducing some of those changes last year and simply agreed to follow its own roadmap. The changes include limiting teens to two hours of scrolling per day, unless their parents say otherwise, barring usage between midnight and 6:00 a.m., and turning off notifications during school hours. That's telling your kids they can only light up after class and not between

• 3:47George Hahn?

  midnight and 6:00 a.m. Teens can also turn off autoplay and switch their settings from the "for you" style algorithmic feed to a chronological one. Meta promised to disable "counting" on the "like" button and ban "extreme makeup filters," which will supposedly throttle back teen anxiety, depression, and body image issues. Meta said it would strengthen protections against "unwanted contact from strangers." A weird thing to have ever opposed, as the absence of such safeguards was a gift to child predators. Lastly, Meta promised to

• 4:26George Hahn?

  invest in age verification, though responsible corporate citizens already do this. What the settlement doesn't do is change Meta's design priorities. As my friend and colleague Jonathan Haidt, an NYU social psychologist, noted, "The settlement leaves many of the most harmful features untouched, including the algorithm." Meta's AI-powered recommendation engine is still running, engineered to maximize young people's engagement even with content that harms them. The ugliest part of the settlement?

• 5:06George Hahn?

  It makes Meta stronger. First, the company can weaponize compliance, digging a moat against new entrants. Second, by conditioning additional safeguards and $5 billion of the fine on YouTube and TikTok agreeing to similar terms, Meta has turned its competitors into corporate shields. Maison Zuckerberg even launched an ad campaign to pressure YouTube and TikTok and position itself as the leader on child safety. If laddering is highlighting your brand's strengths while depositioning a competitor and illuminating their weaknesses

• 5:48George Hahn?

  —the way I use the term in my brand strategy course at Stern—Meta's settlement is a roundhouse kick, knocking the feet out from under its rivals. Fun fact: Don Draper deployed laddering to weaponize government regulation to Lucky Strike's advantage in the pilot episode of Mad Men. Meta's behavior is far worse, and its reach far greater than those of its competitors. But sure, they're all the same. Mark Zuckerberg coined the phrase "move fast and break things" in 2012 to describe the culture of innovation he built at Facebook, now Meta. More than a decade later, it's

• 6:30George Hahn?

  clear that by "things," he meant "us." Fines are supposed to be a financial deterrent against future breakage. $17 billion is real money, but applied to an enterprise of Meta's scale? It's a speeding ticket. Imagine if I told my Prof G Media team to create an addictive product that's always in your ears, inspires five-plus hours a day of doom scrolling, leverages network effects and addictive design to lock in users, renders them depressed and anxious, and envelops society in a toxic

• 7:11George Hahn?

  fog of rage and polarization. Some Prof G Media employees would likely blow the whistle. But imagine if I responded by deploying publicists and lobbyists to smear them, conceal our culpability, promise to do better, and engineer legislative paralysis such that Prof G Media operated with impunity. How big would the fine have to be to deter my behavior? Prof G Media generates $20 million in annual revenue, with an operating margin of 60%.

• 7:52George Hahn?

  Its valuation is around $100 million. Meta's 2025 revenue was $200 billion, with an operating margin of 41%. Its market cap is $1.4 trillion. A $17 billion fine, scaled down to Prof G Media and spread out over 10 years, would equal a $256,000 annual hit to our operating profit. That's not a deterrent, but a green light to move faster and break more things.

• 8:33George Hahn?

  The 1998 Tobacco Master Settlement Agreement levied a fine of $206 billion—$422 billion adjusted for inflation—payable over 25 years against the four largest cigarette makers. Two of those companies—Philip Morris, now Altria—and R.J. Reynolds—are still selling cancer sticks. The other two, Brown and Williamson and Lorillard, are now owned by R.J. Reynolds. Regulatory friction catalyzes consolidation. Since 1998, federal taxes on cigarettes have increased fourfold, while state taxes,

• 9:15George Hahn?

  on average, have increased by 6X. Smoking rates among adults dropped 73% between 1965 and 2022, and rates for teens fell by 86% from 1997 to 2021. But the tobacco companies didn't stand still. They innovated. In 2019, 1 in 3 American teens reported using e-cigarettes, which are taxed at lower rates than the analog version. The numbers have fallen, thanks to some states banning flavored e-cigs, but curbing the negative externalities of tobacco

• 9:56George Hahn?

  is a game of whack-a-mole. As Stanford historian Robert Proctor told The New York Times, "Today is not the beginning of the end for social media. Any more than 1998 was the beginning of the end of big tobacco." Americans still smoke more than 170 billion cigarettes every year and inhale tons of additional nicotine from electronic variants. The picture is even grimmer if you widen the lens. Globally, 1 out of every 5 adults is a customer, and 80% of them live in low- and middle-income countries. This is by design, as tobacco companies pivoted to developing nations with a continued emphasis on targeting

• 10:41George Hahn?

  young customers. Big tobacco is still killing it, i.e. others.

• 10:50George Hahn?

  El negocio de los medios está construido en la base de un arbitraje de la atención a los beneficios. Pero durante siglos la tecnología de conversión fue rudimentaria y sus emisiones eran tolerables. Además, debido a que la distribución era física, el auge-gateo era práctico. Los Estados Unidos tienen una larga historia de auge-gateo de cosas perjudiciales que no son legal para adultos: armas, búsquedas, porno, etc. Esto no es paternalismo, es sentido común. Cuando lanzamos a las publicaciones de los python que apoyaban la reticulación en el ecosistema online, sin embargo, se convirtieron en una especie invasiva y el sentido común murió.

• 11:31George Hahn?

  Zuckerberg no inventó las emisiones de los medios sociales, pero Meta las escaló a más de la mitad del planeta. A pesar de la proliferación de contenido que ganaría nuestra calidad de streaming, NC-17 y X en las películas, tratamos los medios sociales como de G. Una mayoría de los estadounidenses apoya las restricciones de edad. De hecho, nueve estados tienen leyes de verificación de edad activa, mientras que otros ocho han aprobado leyes que los tribunales han bloqueado a continuación.

• 12:08George Hahn?

  Si hay un problema con el auge-gateo, es que hemos comprado la narrativa de libertad de expresión contra la seguridad de los niños, es decir, mierda. Asumiendo que aprobará la escrutinía constitucional, sin embargo, el auge-gateo solo restricta el flujo de nuevos clientes, no el producto. La reforma con los dientes requerirá cambiar los incentivos. Aquí están tres ángulos de ataque. Primero, reforma la sección 230, que protege las plataformas y sitios web de la responsabilidad legal por el contenido que publican sus usuarios. La ley de 1996 fue escrita para boletines online, no para las máquinas de ingeniería de comportamiento de un billón de dólares.

• 12:53George Hahn?

  ¿Un mejor marco? Mantiene la inmunidad para la expresión de terceros, pero impone responsabilidad por la amplificación algorítmica, justo como impusimos responsabilidad por los productos físicos. Si elevas el contenido, has tomado una decisión editorial. Somos una empresa de medios y deberíamos cumplir con las mismas normas que todas las demás empresas de medios. Los medios sociales cambiarían de noche a noche, no porque los ejecutivos crezcan una conciencia, sino porque el oficial legal principal tendría un mayor número de riesgos legales que el jefe de crecimiento, el beneficio de ingresos.

• 13:33George Hahn?

  Los incentivos impulsan el comportamiento y el beneficio de seguir perjudicando a los niños sigue siendo mayor que el desgaste. Segundo, reanudar la antitrust. La tecnología no es neutral, su diseño es una función del grado en que el poder económico está concentrado. "Los grandes monopolistas no son pasivos", escribió el profesor de derecho de Columbia, Tim Wu, en "La época de la extracción". "Defenden activamente su posición en el mercado al adquirir amenazas o competidores".

• 14:12George Hahn?

  Visite la adquisición de Instagram y WhatsApp de Meta o la adquisición de YouTube y DeepMind de Google. Ir a Teddy Roosevelt con los monopolistas de información beneficiaría a todos. Las lecciones de Standard Oil y AT&T son que las desaccesiones desbloquean el valor de los accionistas, aumentan la innovación a través de la competencia, reducen los alquileres de los consumidores y proporcionan a los trabajadores más ofertas por su trabajo. ¿El marco? La antitrust podría ser la mayor caja de impuestos en la historia. Finalmente, caja de impuestos a las emisiones de los medios sociales.

• 14:56George Hahn?

  Si las plataformas tecnológicas son demasiado grandes para regular, las reducen al impuestos a los ingresos de las ventas de publicaciones digitales destinadas. Como escribió el economista Paul Romer en 2019, "Las empresas que buscan evitar el impuesto juegan en nuestras manos porque son susceptibles de perseguir un modelo de suscripción sin publicidad, como Substack. El éxito de esas empresas no se detendría más en la vigilancia y la adicción, sino en una transición de valor clara". Algunas plataformas seguirán con el modelo de publicidad destinada sin importar, pero un impuesto progresivo con tasas mayores para las grandes empresas rendería a la Big Tech... "tech".

• 15:42George Hahn?

  El momento del Big Tobacco terminó con la riqueza de los accionistas de Meta, los competidores más débiles y su modelo de negocio intacto. ¡Nos han jugado... ¡de nuevo!

• 16:00Speaker 02

  ¡La vida es tan rica!