European Commission Preliminarily Finds Meta in Breach of Digital Services Act for Addictive Design
The finding targets Instagram and Facebook's features like infinite scrolling and push notifications, potentially leading to significant fines for Meta.
The story
The European Commission has issued a preliminary finding that Meta violated the Digital Services Act (DSA) due to the addictive design features implemented on Instagram and Facebook. Announced on July 10th, the investigation specifically points to elements such as infinite scrolling, autoplay, push notifications, and highly personalized recommendation systems.
The Commission's report indicates that Meta did not adequately assess the potential risks these features posed to users' physical and mental well-being, particularly minors and vulnerable adults. Furthermore, evidence suggests that Meta's existing mitigation measures have not effectively addressed these risks.
If these preliminary findings are confirmed, Meta could face substantial fines, potentially reaching up to six percent of its annual revenue. Meta has disputed the findings, stating it has taken steps to protect children online.
Who moved
Meta
What Changed: Plans to begin manufacturing its in-house AI chip, Iris, in September.
Why It Matters: This move aims to double Meta's computing capacity to 14 gigawatts by 2027 and reduce its reliance on third-party AI chip suppliers.
Apple
What Changed: Announced a new multi-year agreement with Broadcom, valued over $30 billion, to design and produce wireless components in the United States.
Why It Matters: This partnership is a significant investment in domestic manufacturing, securing critical tech components and supporting American jobs.
Microsoft
What Changed: Faces a class action lawsuit filed by Pomerantz LLP regarding alleged securities fraud related to its Copilot offerings and Q2 FY26 earnings.
Why It Matters: The lawsuit alleges functionality issues and market share loss for Copilot, impacting investor sentiment.
Products & launches
Muse Image
Company: Meta AI
What: An image generation model integrated into Meta AI that creates and edits images from text prompts and user-provided photos.
Muse Spark 1.1 API access
Company: Meta
What: Meta is now offering developers API access to its Muse Spark 1.1 model, signaling a shift towards monetizing its AI services.
OpenAI GPT-5.6 on Azure Databricks
Company: Microsoft
What: OpenAI GPT-5.6 is now generally available on Azure Databricks, allowing users to build, deploy, and manage AI applications securely.
Platforms & policy
European Commission
Development: Accepted commitments from SAP to address EU competition concerns regarding its aftermarket support services for on-premises Enterprise Resource Planning (ERP) software, making these commitments legally binding under EU antitrust rules.
Money & markets
Amazon. AWS revenue grew 28% to $37.587 billion in Q1 2026, marking its fastest growth in 15 quarters.
Alphabet (Google Cloud). Google Cloud revenue grew 63% to $20.03 billion, with its backlog nearly doubling quarter-on-quarter to over $460 billion.
Microsoft. Q3 FY26 capital expenditures totaled $30.88 billion, an 84.39% year-over-year increase, while its AI business reached a $37 billion annual run rate, up 123% year-over-year.
Meta. Analysts at Wolfe Research highlighted that monetizing every gigawatt of compute at a $25 billion rate could significantly boost Meta's earnings per share, reiterating an Outperform rating with an $800 price target.
What we'll be watching
- Microsoft's latest earnings report on July 13th, expected to offer new clues on AI spending and Azure growth.
- TSMC's Q2 earnings report on July 16th, with analysts watching for updates on advanced packaging capacity and AI chip demand.
- Apple's earnings report on July 30th, which could provide insights into its market valuation and product momentum.
- The August 11th deadline for investors to ask the Court to be appointed as Lead Plaintiff in the class action lawsuit against Microsoft.
- The Antitrust Global Seminar Series in Brussels on September 2nd, discussing competition, consumer protection, and data privacy.
Reporting + analyst voices: grounded via Google Search at publish time.