Meta & Children's Online SafetyMarket Landscape Review: Teen Opportunity Cost and Lifetime Value
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Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 1 of 16 AMENDED Exhibit 71 PLAINTIFFS' OMNIBUS OPPOSITION TO DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT Case No.: 4:22-md-03047-YGR MDL No. 3047 In Re: Social Media Adolescent Addiction/Personal Injury Products Liability Litigation 2/9/24, 3:24 PM Case 4:22-md-03047-YGR Document264887 RevFiles01/20626ace Page 2 of 16 MK & Youth Platform Product Reviews Closed Group 129 members Summaries of the MK Leads Reviews with slides and notes/acti... See more Posts Files Topics More https://fb.workplace.com/groups/104473690195205/permalink/261510897824816/ HIGHLY CONFIDENTIAL (COMPETITOR) (PM) September 6, 2018 Market Landscape Review: Teen Opportunity Cost and Lifetime Value We size the loss in revenue from not having US teens and also the approximate present value of each additional US teen for Facebook. All figures are presented as ballpark approximations since many simplifying assumptions were made. The major takeaway from this work is that we are in the right range if we spend $100-$200 per teen. US TEEN OPPORTUNITY COST • Just in the US, we have an opportunity cost of $150 million in 2019...this rises to $1.8 billion in 2030 • The total present value loss is ~$12 billion By 2030, Facebook will have 30 million fewer users than we could have otherwise if we do not solve the teen problem US TEEN LIFETIME VALUE • The lifetime value of a 13 y/o teen is roughly $270 per teen • This is driven by the fact that younger users have much higher long term retention than older users • However, do note that older users have much higher average revenue per users (ARPU) than younger users • A case could be made to pursue young adults if we are able to increase their long-term retention Special thanks to possible without that work on long term retention--LTV would not be (This review was formerly the Competitive Landscape Review.) arket Landscape Revie September 6, 2018 MARKET STRATEGY fburl.com/ms 00000 US Teen Opportunity Cost Teen Opportunity Cost ective e the case for investment in teens by showing in concrete terms the misse cial opportunity mple Uses hat is Facebook's projected revenue in the United States if we do not solve > teen problem? ould I invest more in teens or in FB Watch? US Teen Opportunity Cost da Lifetime Value +9 1 share Seen by 11 Add people Q Search group... 1/2 ΜΕΤΑ3047MDL-005-00000318 2/9/24, 3:24 PM Case 4:22-md-03047-YGR Documentt@64 Bit Reveileps01/2062place Page 3 of 16 https://fb.workplace.com/groups/104473690195205/permalink/261510897824816/ HIGHLY CONFIDENTIAL (COMPETITOR) Like Write a comment... Comment Share 2/2 META3047MDL-005-00000319 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 4 of 16 CONFIDENTIAL Market Landscape Review September 6, 2018 HIGHLY CONFIDENTIAL (COMPETITOR) MARKET STRATEGY fburl.com/ms META3047MDL-005-00000320 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Agenda HIGHLY CONFIDENTIAL (COMPETITOR) US Teen Opportunity Cost Lifetime Value Page 5 of 16 META3047MDL-005-00000321 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 6 of 16 US Teen Opportunity Cost HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000322 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 7 of 16 US Teen Opportunity Cost Objective Make the case for investment in teens by showing in concrete terms the missed financial opportunity Example Uses • What is Facebook's projected revenue in the United States if we do not solve the teen problem? • Should I invest more in teens or in FB Watch? HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000323 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 8 of 16 Key Variables and Simplifying Assumptions Variables • ARPU by age • US population projections • FB's maximum population penetration by year of birth • Economic growth rate, WACC Assumptions • ARPU by age does not change over time • FB's maximum population by year of birth "bottoms out" at 23% HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000324 Case 4:22-md-03047-YGR Opportunity Cost Result HIGHLY CONFIDENTIAL (COMPETITOR) Document 2648-37 Filed 01/20/26 Page 9 of 16 Addressed Pop. Delta Revenue PV 2019 6.142.916 $ 142,921,519 $ 129,928,653 2020 8,546,980 $ 198,854,665 $ 164,342,698 2021 10,926,877 281,704,062 $ 211,648,431 2022 13,271,858 $ 509656507 277,275,873 2023 15,586,310 $ 548,359,511 S 340,488,113 2024 721,511,293 $ 407,274,315 2025 20.136.699 893,783,626 $ 458,652,324 2026 22,379,626 1,064,386,927 $ 496,544,357 2027 24,608,675 $ 1,232,930,033 5 522,882,591 2028 26,876,745 $S 1,416,593,254 $ 546,158,023 6202 29.176.633 $ 1,623,821,240 $ 569,139,438 2030 31,526,020 $ 1,841,779,196 $ 586,847,611 Total 10,372,604,931 5 4,711,182,528 Terminal Value $ 23,482,684,747 $ 7,482,307,043 33.855,289,678 $ 12,193,489,571 META3047MDL-005-00000325 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 10 of 16 Discussion • From an opportunity cost perspective, the loss of teens is material. From around $150 million in 2019 to $1.8 billion (-$600 M in PV) in 2030. And a present value of roughly $12 billion • By 2030, the number of FB users in the US will be roughly 30 million fewer people, conservatively assuming that what ails teens does not ail the rest of the population • The findings here are US only-assuming that our teen problem is global, the opportunity cost is likely much greater HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000326 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 11 of 16 US Teen Lifetime Value HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000327 Case 4:22-md-03047-YGR US Teen Lifetime Value Objective Document 2648-37 Filed 01/20/26 Page 12 of 16 Make more informed financial decisions on how much to spend on acquiring and engaging teens Example Uses • How much should I spend on acquiring content (e.g., shows, funny short videos)? • How much should I pay for a "traction" M&A target on a per DAP basis? • Generally, how much should I spend on acquiring users for Bell, our high school product? • What's a reasonable level of funding for a teen ambassador program? HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000328 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 13 of 16 Key Variables and Simplifying Assumptions Variables • ARPU by age • Retention by age joined Facebook WACC (cost of capital) = 10% Assumptions • Average ARPU by age = Marginal ARPU by age • Average retention by age you join FB = marginal retention by age you join FB • Retention by age drops to long term retention in Year 2 • ARPU by age remains the same HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000329 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 14 of 16 Lifetime Value Result Net Present Revenue by Age Joined Facebook $300 $250 $200 $150 $100 $50 $- 13 26 29 32 35 38 41 HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000330 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Page 15 of 16 Potential Future Explorations • Compare against Instagram • Teen long term retention in the present day may be higher than in the past • Teen ARPU on IG may be higher than on FB • Investigate time spent • MAP may underestimate true differences between cohorts (e.g., earlier cohorts may spend more time on FB than later cohorts) HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000331 Case 4:22-md-03047-YGR Document 2648-37 Filed 01/20/26 Recommendations Page 16 of 16 • Because of the high value of young teens, more product teams, and not just the Youth Team, should care about young teens as those are the users with the potential for highest loyalty and value over time • If we are looking to spend near or more than the lifetime value ($270) per young teen, then that spending should result in extra scrutiny • Given the importance of lifetime value, we should find a long term owner for the model-Youth leadership likely needs to make the case to Finance • Analytics should track long term retention to understand app health and user behavior HIGHLY CONFIDENTIAL (COMPETITOR) META3047MDL-005-00000332