EU Draft Law Threatens Tech Giants With 6% Revenue Fines

Social media companies that fail to let users switch off addictive features would face fines of up to 6% of worldwide annual revenue under a draft European Union law seen by Bloomberg News. For a company the size of Meta Platforms Inc., which generated roughly $135 billion in revenue in 2023, that ceiling would translate into a potential penalty of about $8 billion on a single enforcement action.

The draft, named the "Digital Fairness Act," is set to be presented Wednesday, according to Bloomberg. The European Commission declined to comment on the text. A decline to comment is standard practice for unpublished drafts, but it also means the final proposal may differ from what Bloomberg reviewed.

What would the Digital Fairness Act require?

Under the draft, companies would have to give adult users the ability to turn off features that encourage compulsive or excessive use of their services. The rules would also cover AI systems that simulate personal relationships to keep users interacting — a direct strike at the fast-growing market for AI companion chatbots.

The obligation, as drafted, applies to adults. That distinction matters: minors fall under separate legislation, which suggests the Commission sees compulsive-use harms as an adult problem too, not only a child-safety issue.

Takeaway: platforms could be forced to ship an off switch for the engagement machinery itself, not just add warnings around it.

Who is in the crosshairs?

Bloomberg reports the measures could affect some of the world's biggest technology companies, including Meta Platforms Inc., Alphabet Inc.'s Google and ByteDance Ltd.'s TikTok. All three rely heavily on features designed to prolong time spent in their apps — recommendation feeds, autoplay, notification loops and, increasingly, conversational AI.

The draft does not, on the reported facts, name any company. "Could affect" is Bloomberg's framing, based on business models rather than an explicit target list. Whether the final text names designated firms or applies sector-wide will determine the compliance burden.

Takeaway: the exposure is model-wide — any service built on engagement-maximizing design sits inside the blast radius.

Is this the EU's first move against addictive design?

No. The European Commission has already moved against social media giants over features that keep users glued to their apps. Both Meta and TikTok are under formal investigation on suspicion of addictive design under the Digital Services Act, the bloc's content moderation rulebook.

That record cuts both ways. It shows enforcement appetite is real, not theoretical. It also shows the existing toolkit may have felt insufficient — otherwise a new act would be redundant. The draft does not say, on the reported facts, how the 6% fine ceiling would interact with DSA penalties for the same conduct.

Takeaway: the EU is stacking a second legal layer on top of an enforcement track that is already running.

What about children?

Separately, the EU plans to ask social networks and AI companies to make their platforms "safe by design" as part of a sweeping Kids Act. That legislation would also restrict social media use for young teens.

The Kids Act and the Digital Fairness Act would thus split the population: adults get opt-outs, minors get structural restrictions. Details of the teen restrictions — age thresholds, enforcement, parental roles — were not in the reported draft, and those details will decide how intrusive the rules feel in practice.

Takeaway: two laws, one direction — design itself, not just content, is now the regulated object.

What happens Wednesday?

The Commission presents the proposal Wednesday, according to Bloomberg. Presentation starts the legislative process; the text must still clear the European Parliament and member states before it becomes law, a path that has historically taken months or years and invites intensive industry lobbying.

The 6% figure, notably, matches the penalty ceiling the EU already applies under the DSA — a signal that Brussels wants maximum deterrence available from day one.

Takeaway: expect the draft to be fought over line by line before any off switch becomes legally mandatory.