Oh they absolutely know. I've had some tragi-comic interactions with trust and safety folk in tech. You aren't going to be very popular in the firm telling people their stuff is bad for users.

Its easiest to think of tech firms as a tale of 2 different dichotomies. Internally, the firm is split between the people who are told to do best for their users and the people who are told to do best for the next quarterly earnings call.

So you may have a bright and shiny idea, but its not really going to increase time on site. And if you don't increase ToS, then that other social platform which is nibbling at your lunch, will starve you into an early grave.

The other strange juxtaposition is between tech firms trying to suggest actually better policy, while also sitting on data that they dont want to share because they are afraid it will get used against them. Which it absolutely will, because when people understand how the sausage is made, they are absolutely aghast.

This leaves regulators mostly in the dark, and then they are forced to act. At which point lobbying comes into play once again.

You wouldn't be alone in thinking this whole story sounds similar to Big Tobacco and Big Oil.