Meta removed an AI image generation feature from Instagram that let users create images referencing public accounts without those accounts' knowledge or consent, following pressure from users and the entertainment industry. Separately, a Los Angeles federal jury found that Instagram was deliberately designed to be addictive in a way that harmed user mental health, with Mark Zuckerberg testifying at trial. These two events landed within the same news cycle, compounding regulatory and reputational pressure on the platform.
The addiction verdict sets a legal precedent that plaintiffs' attorneys will cite in future cases, raising Meta's long-term litigation liability in ways that are difficult to price today. The pulled AI feature signals that Meta's consumer AI rollout is facing friction on the platform that generates a large share of its advertising revenue. Together, these events put Instagram's advertiser relationships and regulatory standing under renewed scrutiny.
Next Meta earnings call (late July): management will face direct questions on litigation costs and AI product strategy. Any scheduled Congressional or FTC hearings on social media addiction liability (dates TBD). EU Digital Services Act enforcement reviews, ongoing throughout Q3.
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