> causing major headaches for social media companies attempting to strike a balance for users between legal compliance and privacy.

I can see how the problem is real. (Not sarcasm.)

In technical terms, "balance" is trivial. Put an air/security gap between information collected for age verification and the dossiers they have on users.

In business terms, conflict. They have relentless incentives and pressures to collect, collate and leverage every bit of information that can increase their return on users. Legal gray and black behaviors are rampant and tolerated where protectable. The number of paths to a creative interpretation of "balance" is unbounded. Right up to the c-suite.

It is sad, but self-aware, if they feel awkward trusting themselves with a mandated database full of tasty information they are not supposed to taste.