EU Antitrust Charge Escalates Meta's Regulatory Risks, Threatening AI Ambitions on WhatsApp

What happened

EU competition regulators have charged Meta Platforms with breaching antitrust rules by blocking AI rivals from WhatsApp and threatened interim measures. This news amplifies the regulatory vulnerabilities highlighted in the DeepValue report, which already identifies EU DMA enforcement as a critical risk to European monetization. The report emphasizes that Meta's 2026 investment thesis depends on ad yield sustaining through a massive capex surge, with EU consent choices potentially driving negative price-per-ad trends. By targeting WhatsApp, a key messaging service, this charge could force operational changes or fines, straining Meta's ability to fund its $115B-$135B AI infrastructure plan without external financing. Overall, it underscores growing regulatory headwinds that may impair cash flow and challenge management's underwriting of 2026 operating income above 2025 levels.

Implication

The EU charge introduces immediate legal and operational uncertainties, likely leading to fines or mandated access for rivals on WhatsApp, which could slow Meta's AI integration efforts. This development directly exacerbates the EU DMA risks cited in the report, where any deterioration in price-per-ad metrics would threaten the funding model for Meta's capex surge. Management's guidance for 2026 operating income above 2025 is now at higher risk, as regulatory actions could compress margins or necessitate costly compliance measures. Consequently, the WAIT rating is strengthened, with investors advised to closely monitor Q1-Q2 results for early signs of regulatory impact on ad yield and expenses. Failure to mitigate these risks could accelerate the bear scenario, driving valuations toward the $520 implied value.

Thesis delta

The thesis previously focused on EU DMA consent choices impacting ad personalization; now, antitrust charges add a new layer of regulatory risk specifically targeting AI competition on WhatsApp. This shifts the risk profile toward more immediate threats to Meta's AI strategy, potentially hastening the bear scenario where EU monetization weakens. However, the core thesis of waiting for ad-yield confirmation remains valid, but with increased urgency due to these escalated pressures.