Grey-zone

US$18B. The price of the brain rot epidemic? 

A coalition of 47 U.S. states sued Meta ($META), alleging Facebook and Instagram were designed to be addictive to minors. Last week, Meta agreed to a two-hour daily cap and a host of other changes for users aged 13-17. It will also pay an almost US$18B settlement, just slightly more than Meta’s US$16B in net profit last quarter.

But Meta’s position is more: If I’m going down, you’re going down with me. It pays a final US$5.3B only once Snap ($SNAP), TikTok and Alphabet’s ($GOOGL) YouTube adopt similar rules.

Prediction markets firm Kalshi also had a bad day in court. A new ruling from the 9th Circuit eliminates the loophole that allowed Kalshi to operate as ‘the first app for legal sports betting’, as it is technically a ‘designated contract market’ under the Commodity Exchange Act (CEA). 

That’s also bad news for Robinhood ($HOOD), which made US$156M from its prediction markets and event contracts in Q2. It’s the first time the segment has overtaken crypto trading revenue in history. But the verdict was better received by Flutter ($FLUT) and DraftKings ($DKNG), which get more claim to their turf.

Another grey zone is Amazon’s ($AMZN) US$68B in 2025 ad revenue. The FTC and 22 U.S. states are suing the company for secret price hikes, alleging Amazon used its own ‘soft-reserve’ mechanism to raise minimum bids up to 80% of the time.

But the debate around AI’s circular financing is attracting the most attention. Anthropic just signed a US$35B cloud deal with Nvidia-backed ($NVDA) Lambda. The twist is that Nvidia is the landlord, locking down capacity after a deal with Hut 8 ($HUT) to build another Texas data centre. Lambda will then use the space to run chips it bought from Nvidia.

Over in California, the haze around wildfire liability just got clearer. After a legislative effort to limit utility companies’ exposure to lawsuits from insurance firms collapsed, so did the share prices of Edison International ($EIX) and PG&E ($PCG). Both stocks dropped over 20% on Monday.

There’s always risk for companies operating in ambiguity. For some, it’s a financial hit that doesn't meaningfully tip the scales. For others, it might be time to reevaluate the business model.

This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

Samy Sriram

Markets Analyst

Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.