Meta and Alphabet stocks crash after landmark child safety verdict

A Los Angeles jury's ruling against Meta and Alphabet sent shockwaves through the tech industry on March 26. The decision found both companies negligent in protecting children from addictive platform designs. Shares in the two giants plunged sharply as investors reacted to the legal fallout.

The verdict also arrives amid growing global restrictions on social media for minors, with Austria, Germany and Australia introducing or debating new bans for under-16s. The jury's decision accused Meta and Alphabet of knowingly making their platforms addictive for young users. Meta's stock suffered its worst drop in months, falling nearly 8%. Alphabet's shares also declined by over 3%, pushing its year-to-date losses past 10%.

Alphabet had previously gained ground in 2025 after winning a major antitrust case. But the latest ruling now threatens to overshadow that progress, with GOOG stock nearing bear market territory—down almost 20% from its peak. The company has already announced plans to appeal, arguing that YouTube operates as a streaming service, not a social media platform.

The financial impact was immediate. Meta, which relies almost entirely on social media for revenue, faced steeper losses than Alphabet. YouTube contributes less than 15% of Alphabet's total income, offering some insulation.

Beyond the US, the legal ruling adds momentum to stricter global regulations. Australia has already banned social media for under-16s. In Europe, Austria's government agreed to block platforms for under-14s, while Germany's SPD proposed a similar ban, with EUDI-Wallet restrictions for 14- to 16-year-olds. Analysts warn the case could also set a precedent for future lawsuits targeting AI chatbots. The March 26 ruling has left Meta and Alphabet facing both legal challenges and market pressure. With stock prices tumbling and global regulators tightening rules, the companies now confront a shifting landscape. The case may also pave the way for broader litigation over digital addiction and child safety online.