What timeline is anticipated for the investigation and any resulting legislative or enforcement actions?

Anticipated timeline

Sen. Josh Hawley’s request for a formal probe of Meta’s AI‑bot policies for children is being treated as a Congressional oversight investigation rather than a fast‑track regulatory action. Historically, similar Senate‑led inquiries into tech‑company practices take 3‑6 months to gather documents, interview witnesses and produce a committee report. If the committee finds substantive violations, any legislative response—such as a new “child‑AI safety” bill—would typically be drafted and introduced in the next congressional session, putting the first round of statutory proposals 12 months or more out from the start of the probe.

Enforcement actions by the FTC or the Federal Trade Commission’s Consumer Protection arm would most likely follow the committee’s findings. Assuming the investigation yields a “report‑and‑recommend” outcome, FTC or state‑attorney‑general actions could be filed 6‑9 months after the report is released, giving regulators time to build a case and issue cease‑and‑desist orders or fines.

Trading implications

• Short‑term (0‑3 months): Expect heightened volatility as the market digests the initial request for document preservation and the potential for a protracted information‑gathering phase. The META stock could see a 5‑8 % dip on the news, especially if analysts flag exposure to regulatory risk.
• Mid‑term (3‑9 months): If the committee’s report is critical and legislative drafts appear, the downside pressure could deepen, with the risk of 10 %‑12 % underperformance versus the broader market. Conversely, a “no‑substantial‑issues” finding could trigger a rebound and a short‑cover rally.
• Long‑term (12 months+): Any eventual legislation or FTC enforcement would likely be priced in well before execution, so the market will have already adjusted. Positioning should therefore focus on defensive hedges (e.g., protective puts) now, while keeping a modest long‑biased stance for a potential bounce if the probe stalls or yields a benign outcome.