Facebook parent company Meta, formerly known as Facebook, is facing accusations from EU regulators for not complying with the bloc’s antitrust rules regarding its ad-supported social networking service. The European Commission has criticized Meta for offering a “pay or consent” model, where users are required to either pay for an ad-free experience on Meta’s platforms or consent to their data being used for personalized advertising. This model, according to regulators, does not provide users with the option of using a less personalized but equivalent version of Meta’s social networks, such as Facebook and Instagram in Europe.
In response to the allegations, a Meta spokesperson stated that the ad-supported subscription model was developed in accordance with the guidance of the highest court in Europe and complies with the Digital Markets Act (DMA). The company introduced this new model following a ruling from the European Court of Justice that companies can offer an alternative version of their services that do not rely on data collection for ads. This ruling was cited by Meta as the rationale behind the introduction of the subscription offer.
The European Commission highlighted two key reasons why Meta’s ad-supported offering does not comply with the DMA. Firstly, the service does not allow users to choose 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 advertising personalization. Secondly, the EU argued that Meta’s ad-supported model restricts users from freely giving consent for their personal data to be used for targeted online advertising.
The Digital Markets Act (DMA) officially came into effect in March of this year with the objective of curbing anti-competitive practices by large digital corporations and compelling them to open up some of their services to competitors. Companies found in violation of the DMA could face substantial fines, amounting to 10% of their global annual revenue. In the case of repeated breaches, this penalty could escalate to 20% of their revenue. If Meta is ultimately found to be in breach of the DMA, the company could be subject to a fine as high as $13.4 billion, based on their earnings for the year 2023.
Following the preliminary findings from the EU, Meta now has the opportunity to defend itself in writing before the Commission concludes its investigation. The inquiry, which commenced in March alongside similar probes into tech giants Apple and Alphabet, will be completed within 12 months from its initiation. Meta’s compliance with the EU’s antitrust regulations will be closely monitored, considering the potential financial consequences for the company if found guilty of non-compliance.
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