Meta continues to confront regulatory challenges with its controversial strategy to comply with the European Union’s stringent Digital Markets Act (DMA). This plan involves offering Facebook and Instagram subscriptions for privacy-conscious users who prefer to opt out of ad targeting.
Today, the European Commission (EC) announced preliminary findings that Meta’s proposed ‘pay or consent’ model—requiring users to either pay for platform access or consent to data collection for targeted ads—violates the DMA.
The EC indicated that Meta’s advertising approach breaches the DMA in two key aspects. Firstly, it fails to provide users with a service that uses less personal data while being equivalent to the personalized ads-based service. Secondly, it does not allow users to fully exercise their right to freely consent to the combination of their personal data.
Meta will have an opportunity to review the EC’s evidence and defend its policy, a process set to extend over several months. The EC’s investigation is expected to conclude next March. Thierry Breton, the commissioner for the internal market, described this development as ‘another important step’ in ensuring Meta’s compliance with the DMA.
‘The DMA is designed to return power to users regarding the utilization of their data and to ensure a level playing field for innovative companies against tech giants on data access,’ Breton stated.
A Meta spokesperson expressed the company’s intent to challenge the findings, which could potentially result in fines up to 10 percent of its worldwide turnover, and as much as 20 percent for repeated violations if Meta is found guilty.
Meta continues to assert that its ‘subscription for no ads’ model was endorsed by the Court of Justice of the European Union (CJEU) last year. ‘Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA,’ the spokesperson said. ‘We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.’
Nonetheless, critics point out that this endorsement was not an official part of the ruling and concerned an unrelated case regarding DMA compliance. The EC concurred on the need for further discussions, emphasizing in their press release that the Commission ‘continues its constructive engagement with Meta to identify a satisfactory path towards effective compliance.’
The full implications of this regulatory clash could reverberate across various online services, necessitating significant adjustments to business models reliant on tailored advertising within the EU framework.