March 26 wasn’t a pleasant day for social media stocks, which fell sharply after a Los Angeles jury found that Meta Platforms (META) and YouTube were negligent in protecting children on their platforms and deliberately structured their platforms to make them addictive. The ruling comes at a time when broader markets are already under pressure amid uncertainty over the Iran war.
Specifically, META stock fell nearly 8% on March 26 and had its worst day in months, while YouTube parent company Alphabet (GOOG) fell just over 3%. Reddit (RDDT) and Snap (SNAP) also plunged, with the latter witnessing a double-digit dip after the European Union opened a child safety probe against the company.
After yesterday’s fall, GOOG stock extended its year-to-date (YTD) decline to more than 10% while the drawdown from its peak is almost 20%, pushing the stock on the verge of bear market territory. Alphabet stock has fared better than its average “Magnificent Seven” peer this year, however, and was also the best-performing constituent of the coveted group last year.
While Alphabet stepping up its artificial intelligence (AI) game with Gemini 3 helped propel shares in 2025, a key legal victory also drove the rise in GOOG stock. The company won a major reprieve in a U.S. Department of Justice antitrust case as U.S. District Judge Amit Mehta allowed it not only to retain Chrome and Android but also to continue its partnership with Apple (AAPL) that makes it the default choice on iPhones. That case was like a hanging sword for GOOG stock and had been dampening sentiments.
However, legal woes are now back to hitting shares, and while the combined damages that Meta and Alphabet will have to pay after the Los Angeles verdict are a mere $6 million, the ruling could open up a can of worms. Moreover, the ruling comes at a time when there is global clamor over teen social media addiction.
Australia has already banned kids below the age of 16 from using social media, becoming the first country to do so. Several European countries are also at various stages of enforcing such bans. In Asia, Indonesia and Malaysia plan to ban social media for children while in India — which is the biggest market for Meta in terms of users — the state of Karnataka has banned children below 16 from using social media.
