The European Commission announced preliminary findings on Monday that social media company Meta’s “pay or consent” advertising model is in violation of the Digital Markets Act (DMA). Meta, Facebook’s parent company, introduced a new option for EU Facebook and Instagram users in November 2023, allowing them to choose between a paid ad-free version or a free alternative featuring personalized ads.
According to the European Commission, the advertising model does not align with the regulatory requirements stipulated in Article 5(2) of the DMA. This article mandates that users must be given a choice for a less personalized option based on less data without combining personal data without free and explicit consent. Under the DMA, users who refuse data combination must still have access to an equivalent service.
The DMA came into force in March and is designed to ensure fairness and competitiveness within the digital sector. The law establishes criteria for defining “gatekeepers,” which are large digital platforms offering essential services such as online search engines, app stores, and messaging platforms, among others. It places guidelines on these entities to enforce fair behavior and maintain competition.
Meta has been granted the opportunity to review investigation documents and provide a written response. The Commission’s investigation must be completed within 12 months, after which it will conclude whether Meta’s model complies with the DMA. If found non-compliant, the Commission may impose fines, and in cases of systemic violations, additional measures such as divesture or prohibiting the purchase of additional services could be enforced.
This decision marks the latest in the EU’s series of regulatory actions aimed at big tech companies. In recent weeks, the EU has also made preliminary findings against Apple for allegedly preventing app developers from directing users to more affordable alternatives outside its App Store, and against Microsoft for combining the Teams application with its Office software in alleged breach of EU antitrust rules.
Further details on the European Commission’s preliminary findings can be found here.