Big Tech Faces Legal Scrutiny Over Social Media Engagement: Risks And Opportunities For Start-Ups

Authored by Charles Dennis.

Meta and YouTube are facing a landmark trial in California that questions whether key design features on their platforms may encourage addictive behaviour, particularly among children.

Beyond the courtroom, the case is raising broader questions about legal risk in the attention economy and opportunities for new frameworks.

What is The Attention Economy?

Engagement sits at the core of the social media industry and acts as a key performance indicator for platforms. It’s given rise to what’s often described as “the attention economy“.

In an increasingly crowded digital landscape, platforms compete for user attention, because time spent on their services translates into advertising revenue, data collection and algorithmic training.

This model has rewarded high engagement and encouraged design choices that keep users scrolling, but emerging legal scrutiny is beginning to raise questions about how sustainable this approach really is.

Is Engagement Becoming a Legal Risk?

This week marked the start of a trial in a Los Angeles court against Meta, Instagram’s parent company, and Google’s YouTube. The case centres on claims that certain platform features may encourage addictive behaviours among children.

While the case focuses on specific companies, it places the broader attention economy under legal scrutiny, with engagement-driven design features expected to come under close examination.

The involvement of children significantly raises the stakes. Products used by minors are often subject to stricter regulatory protections, and experts have long highlighted concerns about their vulnerability during key stages of digital and social development. Engagement-focused design choices that may be fine for adult users can look more problematic when applied to younger audiences.

With several countries considering or implementing restrictions on social media use for under-18s, the pressure on engagement-led models is growing. Whether through regulation or platform-led reform, the current framework is facing increasing challenges as scrutiny intensifies.

Implications for Social Media Start-Ups

Although the spotlight is on Big Tech, start-ups should be paying close attention to what this could mean for the future of engagement design. Many social media start-ups follow industry norms by maximising time spent on the platform, implementing push notifications, and prioritising retention as a core goal.

But new legal scrutiny is leading to questions about whether these strategies will remain sustainable.

Ethical design could become a more prominent consideration for start-ups. Practices such as encouraging responsible social media use, offering clear user controls, increasing transparency, and limiting notifications have so far been seen as optional, but that may be changing.

There are plenty of hidden metrics that start-ups could be utilising to build better relationships with their users. While this presents a challenge for new companies, it also offers an opportunity to build trust with users, which Big Tech has struggled to do.

Start-ups can also differentiate themselves by experimenting with alternative ways to measure engagement. Rather than looking solely at clicks or time spent, new platforms could focus on quality of interaction, user satisfaction or retention without prompting. Rethinking how engagement is defined could prove more sustainable over time.

At the same time, increased scrutiny may bring tighter regulation, which could disproportionately affect smaller companies. Large platforms are better equipped to absorb compliance costs, which could give them an advantage and reinforce their dominance.

For start-ups, this presents a strategic challenge: navigating a changing landscape while using ethical and innovative design to gain a competitive edge.