Meta and Alphabet stocks crash after jury rules on child safety failures

Shares in Meta and Alphabet plunged on March 26 after a Los Angeles jury ruled both companies negligent in protecting children on their platforms. The verdict triggered a sharp sell-off, with Meta's stock dropping nearly 8%—its worst day in months—while Alphabet's shares fell over 3%. The jury's decision centred on claims that Meta and YouTube failed to shield young users from harmful content. Investors reacted swiftly, pushing Meta's stock to its steepest single-day decline in recent times. Alphabet's GOOG shares extended their year-to-date losses to over 10%, edging closer to bear market territory with a near-20% drop from its peak.

The ruling could lead to significant financial penalties, with potential damages of $6 million and broader legal challenges. Alphabet announced plans to appeal, arguing that YouTube operates as a streaming service, not a social media platform. A spokesperson insisted the company designs its products responsibly. Beyond the immediate fallout, the case may set a precedent for lawsuits targeting AI chatbots and other digital services. Regulatory pressure is also mounting globally, with Australia already banning social media for under-16s and other nations weighing similar restrictions. Meanwhile, Alphabet had previously seen gains in 2025, buoyed by AI advancements like Gemini 3 and a favourable court ruling allowing it to keep Chrome, Android, and its Apple partnership intact.

The verdict has put Meta and Alphabet under renewed scrutiny, with legal and regulatory risks now looming. Both companies face potential lawsuits and stricter oversight as governments reassess child safety online. The financial impact remains uncertain, but the case has already shaken investor confidence in tech giants.