Google and Meta - Facebook's parent company - were hit with hefty penalties after being found liable for a causing a young woman's depression and anxiety.
The now-20-year-old successfully argued she became addicted to social media as a child and was awarded damages by a California jury.
The jury found Meta liable for $US4.2 million ($A6.1 million) in damages and Google for $US1.8 million ($A2.6 million).
Both companies plan to appeal the verdict, but the lawsuit would likely open the floodgates for similar cases around the world, multiple legal experts have told AAP.
Australians who've suffered harm at the hands of social media algorithms could make a case by arguing the digital apps were a defective product, University of Sydney associate professor Rob Nicholls said.
"If you bought a kettle and you got electrocuted, you don't want to have to prove negligence. You merely need to prove that the design was faulty," he told AAP.
Lawyers for the young woman in the Los Angeles lawsuit successfully claimed Meta and Google's platforms, including Instagram and YouTube, were defective because their addictive, infinite-scrolling algorithms caused harm to young people.
By focusing solely on the design of the platforms, the case differed to previous legal disputes which raised concerns about potentially harmful content on the apps.
"Rather than saying 'it's all these cat videos, and I can't turn my head away', it's the mechanism by which the software works," Prof Nicholls said.
But the digital regulation expert warned Australia's decision to ban children under 16 from social media could make it harder to mount a class-action case.
"You're not going to have any under-16-year-olds who are addicted, because they will have weaned themselves off by now," he said.
The age restrictions are the subject of a legal challenge from Reddit, which argues it should not be included in the ban.
Ahead of filing its defence, the government has updated its definition of a social media platform to cover services with endless feeds, personalised content, a system of "likes" or "upvotes" and time-limited features such as disappearing stories.
UNSW law professor Michael Legg said users could likely mount a case based on previous harm, even if they had been booted off platforms.
He said product liability laws would be a possible avenue for a legal complaint, but complainants could also try to argue social media companies were deceptive or negligent about how their platforms worked.
The verdict was a watershed moment which should encourage Australia to more closely scrutinise the algorithms behind social media platforms, International Centre for Missing and Exploited Children chief executive Colm Gannon said.
Australia should consider a major increase of fines for social media companies which misbehave, Mr Gannon said, to ensure legal consequences were not simply a "cost of doing business".
A Meta spokesperson said it respectfully disagreed with the verdict and remained confident in its record of protecting teens online.
A Google spokesperson said the case misunderstood YouTube, arguing it was a "responsibly built" streaming platform and not a social media site.
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