EU plan would let users switch off the streaks Duolingo's paywall now runs on
The EU's Digital Fairness Act would let consumers switch off streaks days after cheap AI models destroyed Duolingo's ability to charge for its best feature, leaving gamified friction to carry the paywall that Brussels now targets and shareholders are suing over.
Richard Tangthree-minute read
Brussels proposed the Digital Fairness Act on November 11, and one provision lands squarely on Duolingo−1.53% — Duolingo, down 1.53 percent today: consumers would get the right to switch off addictive design, streaks included, alongside a ban on dark patterns and fines up to 6% of worldwide annual turnover 12. This is a proposal, not law. But it arrives days after Duolingo said an AI conversation now costs well under a penny and announced it is killing its top subscription tier 3. When the AI feature stops being the premium, what is left to charge for is the friction, and friction is exactly what Brussels wants switchable and what shareholders are litigating.
An AI tutor got too cheap to charge for
Duolingo's AI Video Call, the conversation practice with the animated character Lily, cost about 30 cents per call at launch 3. Cheaper open-weight models cut that to well under a penny, so Duolingo stops selling new Max subscriptions this month and brings unlimited Video Call to every Super subscriber by year-end; management calls the bookings effect minimal 3.
For learners this is the chain working as it should: cheap models turn a premium feature into a baseline one. The cost lands one hop up. Duolingo must now convert free users into payers without the AI paywall, and the quarter it just reported shows the gap it has to close.
Duolingo's users grew twice as fast as its paying subscribers
- Daily active users
- Paid subscribers
Data
| Daily active users | Paid subscribers | |
|---|---|---|
| Q3 2025 | 50.5M | 11.5M |
| Q3 2026 | 64.9M | 13.1M |
The paywall moves back to friction
Daily users grew 29% year over year in Q3, accelerating from 23% the quarter before; paid subscribers grew 14% 45. Users are outrunning payers, and the company's plan leans harder on engagement mechanics: longer free trials, more advertising, in-app purchases, and collection events built on streak-style retention 45.
Revenue growth has fallen for six straight quarters and the margin has gone with it
- Revenue growth, year over year
- Operating margin
Data
| Revenue growth, year over year | Operating margin | |
|---|---|---|
| Q4 '24 | 38.8% | 4.6% |
| Q1 '25 | 37.7% | 10.2% |
| Q2 '25 | 41.5% | 13.2% |
| Q3 '25 | 41.1% | 12.9% |
| Q4 '25 | 35% | 14.7% |
| Q1 '26 | 26.5% | 15.3% |
| Q2 '26 | 18.3% | 11.4% |
| Q3 '26 | 13.7% | 7.8% |
That is the same friction the securities class action targets. The complaint alleges Duolingo's Energy system and relentless upsells hurt users while management called the impact "relatively small"; the stock fell from about $260 in November 2025 to $101 by late February 2026, and the lead-plaintiff deadline is December 7 6.
Brussels has the muscle, but the calendar is Duolingo's
The Commission has already proven enforcement: it found TikTok and Meta−0.90% — Meta, down 0.90 percent today in breach of the Digital Services Act's addictive-design rules this summer, under the same 6% ceiling 1. The streak switch-off is the new part, and Duolingo's EU exposure is only one region.
The binding constraint is closer to home. Duolingo shares closed at $163.84 on November 11, up 4.5% on the post-earnings momentum 7. Do not read that rally as the all-clear. The 2027 monetization push rests on the very mechanics now under review in Brussels and in a Pennsylvania courtroom, and the company delivers its 2027 outlook with the February results 7.
When the premium feature costs a penny, what you are really paying for is the friction, and that guide is the number that tests whether the friction holds.
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