I am not sure if the absurdity of that statement is intentional, or a result of just how far the Overton window has drifted.

First of all, private companies shouldn't be given that responsibility to begin with. Meta in particular, has a long history of unethical and immoral usage of personal data. I won't use the term "illegal", as the question of legality becomes moot when punishment can be factored in as a cost of doing business [1]. Given the long list of things Meta has been caught doing, together with the in grand total zero seconds of jail time. I'm genuinely curious as to why you think this would be any different. I'd be surprised if it hasn't already happened, where in some room without windows and a lot of lawyers and business analysts, they have ran models and concluded that the cost of getting caught here is "a good financial decision". Wouldn't be surprised either if it also came with a guarantee of personal protection from prosecution, from NSA and other government entities, in exchange for a hand in that data pipe.

Secondly, for this to carry any plausibility for being motivated by "protect the children" arguments, it requires a minimal effort be enacted on more effective measures, and a measured balance with the cost this comes at. There are very good arguments for why this law would actively harm children. Throw in some Bayesian understanding, and you better have a state of the art system that somehow pretty much never has false positives, nor false negatives, where this was also the only way to detect and avoid said abuse. I don't know the numbers here, but I highly doubt this is a good idea, even with infinite generosity as to good intentions. We've all been children, we've all done stupid things. Now throw in the brilliant and surely-not-to-scar-a-child-for-life situations where parents and strangers looking at something they thought was private, and have a "grown up discussion" about. I shiver at the thought.

Thirdly, and aside from directly harming children in situations where they selves use technology and naively, and unwisely share pictures, consider how many take pictures of their own kids without clothes, because they are normal human beings, who do not consider there to be anything sexual about said depiction. You want to throw law enforcement in the mix here? Child protective services?

Fourthly, consider the possible negative for this abuse. If normal behavior (e.g. children being children, and e.g. normal parents otherwise sharing normal pictures if you are a normal person) can be selectively chosen as being a heinous crime, this should scare anyone, especially consider the political shifting trends towards fascism.

[1]: https://www.creativefuture.org/facebook-scandal-timeline/