Photo Credit: Meta
The European Commission's preliminary findings, released on July 1, 2024, have determined that Meta's "pay or consent" model for Facebook and Instagram users in Europe violates the Digital Markets Act (DMA). This decision marks a significant blow to the tech giant's data-driven advertising strategy.
According to the Commission's press release, Meta's approach "forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta's social networks." This binary choice, the Commission argues, does not align with the DMA's requirements for fair market competition.
The investigation, which began in March 2024, followed months of lobbying from privacy advocacy and consumer protection groups. These organizations contended that Meta's subscription model, charging users nearly €13 per month per account for ad-free access, did not comply with EU data protection or consumer protection rules.
Commission officials emphasized that as long as Meta's social networking services are free, equivalent versions for users who refuse tracking must also be free. Matthew Pollard, a Meta spokesman, defended the company's approach, stating, "Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA."
However, senior Commission officials pointed out that the EU court judgment Meta cited included a caveat that a paid version could be offered "if necessary" with an "appropriate fee." The officials argued that Meta would need to justify why a fee is necessary, suggesting alternatives like contextual advertising that don't rely on personal data.
The potential consequences for Meta are severe. Penalties for confirmed DMA breaches can reach up to 10% of global annual turnover, increasing to 20% for repeat offenses. More critically, this ruling could force Meta to abandon its surveillance advertising model, which has been the cornerstone of its business strategy.
Agustin Reyna, director general of BEUC, the European consumer organization, welcomed the Commission's findings, stating, "It's good news that the Commission is taking enforcement action based on the Digital Markets Act against Meta's pay-or-consent model."
The investigation is ongoing, with Meta having an opportunity to respond formally to the preliminary findings. The Commission has set a 12-month timeline to complete the probe, suggesting a final decision by March 2025.
As the EU continues to lead global efforts in regulating tech giants, the outcome of this investigation could have far-reaching implications for the future of online privacy and the digital advertising landscape.
