Meta, the parent company of Facebook and Instagram, introduced an option for European users in November to pay for ad-free versions of its platforms to comply with strict data privacy laws in the EU. However, EU regulators have accused Meta of breaching the new digital competition rules by compelling users to either view ads or pay to avoid them.
The ad-free option allows users to pay at least 10 euros ($10.75) monthly to avoid targeted ads based on their personal data. This move followed a European Union court ruling that required Meta to obtain user consent before displaying personalized ads, challenging Meta’s advertising-based business model.
The European Commission, the executive arm of the EU, announced that its initial investigation found Meta’s “pay or consent” model violated the Digital Markets Act (DMA). According to the commission, Meta’s approach doesn’t enable users to freely consent to the use of their personal data across various services like Facebook, Instagram, Marketplace, WhatsApp, and Messenger for personalized ads.
Additionally, the commission stated that Meta’s model fails to offer a service that is less personalized yet equivalent to its social network platforms. The commission’s investigation began soon after the DMA was implemented in March, aiming to prevent tech giants from dominating digital markets through stringent regulations and significant financial penalties.
The DMA’s objective is to limit the power of Big Tech companies by regulating the vast personal data they collect, which gives them a competitive edge in online advertising and social media services. The commission suggested that Meta should provide an option that doesn’t rely on extensive personal data sharing for advertising purposes.
European Commissioner Thierry Breton emphasized the DMA’s role in empowering users to control their data usage and ensuring fair competition among tech companies. “The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access,” Breton said in a statement.
Meta now has the opportunity to respond to the commission’s findings, with the investigation expected to conclude by March 2025. The company faces potential fines of up to 10% of its annual global revenues, amounting to billions of euros.
In response, Meta stated that the subscription model for ad-free services complies with the EU court’s direction and the DMA. “Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA,” Meta said in a statement. “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”
Under the DMA, Meta is classified as one of seven online gatekeepers, with services like Facebook, Instagram, WhatsApp, Messenger, and its online ad business among the core platform services requiring the highest level of scrutiny.
This latest action against Meta is part of a series of regulatory moves by Brussels targeting major tech companies. Recently, the EU charged Apple with preventing app developers from directing users to cheaper alternatives outside its App Store and accused Microsoft of violating antitrust laws by bundling its Teams app with Office software.
