EU regulators have accused Meta, the parent company of Facebook, of failing to comply with the European Union’s landmark antitrust rules regarding its ad-supported social networking service. The Commission highlighted the ad-supported subscription option as a “pay or consent” model, which forces users to either pay for an ad-free experience or consent to their data being used for personalized advertising. This binary choice, according to regulators, does not provide users with a less personalized but equivalent version of Meta’s platforms.
In response to the EU regulators’ accusations, a Meta spokesperson stated that their ad-supported subscription model aligns with the highest court’s direction in Europe and complies with the DMA (Digital Markets Act). Meta introduced the new model following a ruling from the European Court of Justice, which stated that companies could offer an “alternative” version of their service that does not rely on data collection for advertising purposes. However, the Commission found that Meta’s ad-supported offering still failed to comply with the DMA due to two main reasons.
Non-Compliance with DMA
The first reason cited by the EU is that Meta’s ad-supported service does not allow users to opt for a version that uses less personal data but still provides an equivalent experience to the personalized ads-based service. Regulators emphasized that users should have the option to access a service that uses minimal personal data for ad personalization. The second reason highlighted by the EU is that Meta’s ad-supported model does not enable users to freely consent to the use of their personal data for targeted online advertising.
The EU’s Digital Markets Act, which came into effect in March, aims to combat anti-competitive practices by large digital companies and requires them to open up some of their services to competitors. Companies found in violation of the DMA can face substantial fines amounting to up to 10% of their global annual revenue. For repeated breaches, the penalty could increase to 20%. If Meta is found to be in breach of the DMA, it could potentially face a penalty of $13.4 billion, based on its 2023 earnings.
After receiving the preliminary findings from the EU regulators, Meta will have the opportunity to defend itself in writing. The Commission’s investigation, which commenced in March alongside probes into tech giants Apple and Alphabet, is expected to conclude within 12 months from the initiation of proceedings. Meta will need to engage in constructive dialogue with the European Commission to address the concerns raised and work towards resolving the investigation efficiently.
Meta’s ad-supported subscription model has come under scrutiny for potentially violating EU antitrust rules by not providing users with adequate options regarding data usage for advertising purposes. The outcome of the investigation will determine the extent of Meta’s liability under the DMA and its obligation to comply with European regulations.
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