The growing crackdown on corporate child exploitation 

In 2019, a team at the company then known as Facebook carried out some private research on a highly sensitive topic: the effects of its Instagram app on the mental health of the teenagers who had become its most enthusiastic users.

The results were troubling. “Teens blame Instagram for increases in the rates of anxiety and depression among teens. This reaction was unprompted and consistent across all groups,” warned the report, which was leaked to the Wall Street Journal two years later. 

The researchers at Facebook — since renamed Meta — noted that ads targeted at teenagers on Instagram were “feeding insecurities, especially around weight and image”.

Teenage users “have an addicts’ narrative about their use”, the internal report went on. “Teens recognise the amount of time they spend online isn’t good for them but at the same time know they lack the willpower to control the time spent.”

Meta has always asserted publicly that it treats the wellbeing of its users as a prime concern. But that priority is in obvious tension with the social media business model, which rests upon the delivery of targeted ads to people — disproportionately children — who spend large amounts of time scrolling on their phones.

Now a wave of lawsuits and government interventions are creating serious dangers for that business model — and for the wider, hugely lucrative field of marketing to kids.

That’s the focus of today’s newsletter. We’ll be off on Friday for the UK public holiday, back in your inbox next Wednesday.

Social media’s ‘Big Tobacco moment’ highlights rising risks around children’s marketing

James McNeal, a pioneer of the art of marketing to children, got a tough reception for his ideas when he started pitching them to companies in the 1960s. “They practically laughed me out of the place,” he later recounted. “‘Kids as a market? You gotta be kidding.’”

The laughter stopped long ago. Around the 1980s, companies started paying real attention to children as a marketing target. They allocated significant resources to promote products directly to kids, bypassing their parents — first through television advertising, later through social media apps, facing little hindrance from legal and regulatory obstacles.

Those obstacles are now getting more serious all over the world. Last week, a Los Angeles jury found Meta, and YouTube owner Google, liable for the mental health problems of a young woman due to the addictive nature of their apps — a “bellwether” trial that could have a bearing on thousands of other US cases being pursued by school districts, state governments and families.

Italian authorities last Friday announced an investigation into two units of luxury giant LVMH, over claims that they had driven obsessive “cosmeticorexia” among children by marketing skincare products to them.

The UK has in effect banned advertising of unhealthy food to kids, soon after San Francisco launched a lawsuit against manufacturers of ultra-processed food, accusing them of “designing, selling, and distributing harmful foods — and relentlessly marketing those foods to children”.

The last few decades have been something of a golden age for those seeking profits from the commercial exploitation of children. There are now signs that it may be drawing to an overdue end.

Direct connections

Look at early and mid-20th-century advertisements for children’s products, and you’ll spot something interesting: they tend to be aimed at parents, not the kids themselves. “Advertisers had to convince moms that the product was beneficial for the child,” economist Juliet Schor wrote in her book Born to Buy.

The change around 40 years ago was driven in part by the rise of children’s cable television stations, which gave advertisers new opportunities to reach kids directly. Growing corporate awareness of child psychology was another factor. Without a fully formed frontal cortex — the part of the brain that enables us to control impulses and resist temptation — a child is an advertiser’s dream target.

“Marketing and advertising have been influential in transforming children into autonomous and empowered consumers,” Schor wrote. “Today, marketers create direct connections to kids, in isolation from parents and at times against them. The new norm is that kids and marketers join forces to convince adults to spend money.”

Schor published her book back in 2004. Since then, the dynamic she described has been taken to a new level by digital marketing to children who spend a large proportion of their waking hours using social media apps on smartphones.

Earlier this year, the consultancy Teneo published a report highlighting the business opportunity presented by “Generation Alpha”, which it defined as children born since 2010.

“Generation Alpha may still be kids — but they’re already rewriting the rules of household spending. Far from passive consumers, they’ve become active co-decision-makers in family purchases,” Teneo executive Gee Lefevre wrote, estimating that these children influenced about $255bn of annual household purchases in the US alone.

Teneo’s report is couched in the language of empowerment rather than exploitation, claiming that today’s children have an “instinct for authenticity in a digital world”, and advising companies that their marketing must “feel genuine rather than algorithmically amplified”.

Joy or anxiety?

Perhaps the most spectacularly successful pre-teen marketing story of the past couple of years have been in cosmetics. TikTok and Instagram influencers — largely children themselves — have been driving surging child demand for skincare products, including anti-ageing creams unsuitable for young skin.

Ulta Beauty — a cosmetics retailer second only to LVMH’s Sephora in popularity among US teens — described this trend in a recent report entitled “Generation Joy”. It included this striking chart based on Ulta’s own research, showing that Gen Alpha girls now tend to start using beauty products around the age of eight, far younger than previous generations:

For these children, Ulta claims, “beauty routines positively impact emotional wellbeing more than previous generations, eliciting feelings of joy”.

Unfortunately, measures of emotional wellbeing among children have shown a sharp decline over the past 15 years, as Jonathan Haidt highlighted in an influential 2024 book, The Anxious Generation.

Haidt makes a persuasive case that this is linked to the same thing that’s been driving sales of cosmetics to children: widespread addiction to smartphones and social media, which has been depriving them of healthy social interaction while heightening insecurities about their appearance and popularity.

He highlights a thick dossier of troubling data sets showing a decline in children’s mental health — especially among girls — that coincided with the social media explosion. Here’s one of them, showing a surge in self-harm incidents by US children aged 10 to 14:

Meta and other social media companies have argued that conclusive evidence is lacking to prove that their apps are to blame for these problems. After Australia last December banned social media use by under-16s, Meta has been urging other countries to make it subject to parental approval instead, arguing that outright bans could drive children towards shadier online alternatives. But major markets including France, Spain, Indonesia and Malaysia have moved to follow the Australian example.

Litigation may be a still more serious risk for the economics of the social media industry. Last week’s verdict against Meta and Google in Los Angeles — and a separate one two days earlier in New Mexico, where Meta was ordered to pay $375mn for failing to protect children from sexual predators — has been labelled a potential “Big Tobacco” moment for Big Tech. Just like the companies that pushed cigarettes in full knowledge of the harms they could cause, Meta and its peers must be held accountable for the damage done by their products, their critics argue.

The tobacco industry ended up agreeing to pay out $206bn to US states over 25 years in a 1998 settlement. Meta has already had $55bn wiped from the market capitalisation it had at the start of last week (its share price has fallen 3.6 per cent, compared with a 0.3 per cent rise for the S&P 500 index).

Beyond the risk of further payouts from a welter of upcoming lawsuits, its investors must grapple with the question of whether these legal problems — and tightening regulations in the EU and elsewhere — will force expensive changes to its fabulously profitable business model.

“Corporations have infiltrated the core activities and institutions of childhood, with virtually no resistance from government or parents,” Schor wrote in her 2004 book. Now — as governments begin to take aim at child marketing, and at the addictive tech that has supercharged it — some resistance appears to be taking shape.

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