🚨 Zuckerberg faces a jury. Why do $META and $GOOGL face a potentially fatal hit to their business model?

This week in Los Angeles a legal battle is unfolding that everyone with Big Tech stocks—specifically Meta and Google—should watch closely. Mark Zuckerberg appeared before a jury on Wednesday in a trial that could become an absolute precedent for the entire social media sector.

This isn't about freedom of speech or content moderation. The plaintiffs are attacking directly the source of the money—the algorithm and product design themselves.

🧠 The core of the dispute: Is their algorithm an addictive weapon?

It was started by a twenty-year-old woman who claims that early and intensive use of Instagram and YouTube led to addiction, depression, and other mental health issues. Important to note, in my view, is that she herself said she spent 16 hours a day on social media. 🤣

Lawyers argue that the companies deliberately designed these apps to maximize screen time, even at the cost of harming young people's health.

TikTok and Snapchat, which were originally involved in the case as well, have already opted to pay out settlements. Meta and Google decided to risk a jury trial.

🤥 But Congress pulled internal emails

The most compelling moments came from Zuckerberg's testimony yesterday. Lawyers confronted him with his own words. As recently as 2024 in Congress, Zuck claimed that Meta did not set goals to maximize the time people spend in the app. But lawyers produced internal documents that suggested the opposite.

Zuckerberg's new defense? “People use our services more simply because they are useful to them.”

And how does Meta defend itself against the very accusation of addiction?

Instagram head Adam Mosseri said in court last week that, in his view, clinical addiction to social media does not exist.

Meta's lawyers argue that the plaintiff's problems stem from a complicated family background and that Instagram merely served as an escape for her.

📉 Three main risks for $META stock

Why should investors care? If Meta loses this test case, it opens Pandora's box:

1) A precedent for thousands more: This trial is the first of its kind. If the jury accepts the logic of “harmful design,” Meta could face thousands of additional lawsuits that would cost it huge sums in settlements.

2) Hit to cash flow: To avoid further lawsuits, Meta might be forced to limit aggressive notifications and recommendation algorithms for young users. The result is simple math: less time in the app = fewer ad impressions = a drop in advertising revenue.

3) Regulatory hammer: Politicians around the world are already looking for ways to restrict networks for children. A lost trial would give them the strongest possible argument for broad age-based bans.

Zuckerberg doesn't have it easy before the jury. If Meta appears arrogant and gives the impression that profit matters more to it than users' health, the market could quickly shift sentiment. 😬