Meta, the parent company of Facebook, has come under fire from EU regulators who have accused the tech giant of failing to comply with the bloc’s antitrust rules regarding its new ad-supported subscription model. The European Commission has labeled Meta’s subscription option as a “pay or consent” model, forcing users to either pay for an ad-free experience or consent to their personal data being used for personalized advertising. This binary choice, according to the Commission, does not provide users with a less personalized but equivalent version of Meta’s social networks, such as Facebook and Instagram.
In response to the allegations, Meta spokesperson emphasized that their ad-supported subscription model aligns 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, which stated that companies could offer alternative versions of their services that do not rely on data collection for targeted advertising. Meta views the ad-supported subscription offer as a way to comply with this ruling while still providing users with a choice.
The European Commission’s primary concern with Meta’s ad-supported subscription model is twofold. Firstly, the model does not offer users the option to switch to a service that uses less personal data while still providing an equivalent experience to the personalized ads-based service. Regulators argue that users should have the right to access a service that uses minimal personal data for advertising purposes. Secondly, the Commission claims that Meta’s model does not give users the freedom to freely consent to the use of their personal data for targeted online ads. These issues have prompted the Commission to investigate Meta’s compliance with the DMA.
The Digital Markets Act (DMA) officially came into force in March of this year, aiming to curb anti-competitive practices by large digital companies and create a more level playing field for competitors. Companies found in violation of the DMA could face substantial fines, potentially amounting to 10% of their global annual revenue. In the case of Meta, if the company is deemed non-compliant with the DMA, it could face penalties of up to $13.4 billion, based on its projected 2023 earnings.
Following the EU’s preliminary findings, Meta now has the opportunity to defend itself in writing before the Commission’s final ruling. The investigation into Meta’s ad-supported subscription model, initiated in March along with probes into other tech giants like Apple and Alphabet, is expected to conclude within the next 12 months. This investigation will shed light on Meta’s compliance with EU antitrust rules and the extent to which the company’s ad-supported subscription model meets the requirements set forth by the DMA.
Meta’s clash with EU regulators over its ad-supported subscription model highlights the ongoing debate surrounding data privacy, personalized advertising, and antitrust regulations in the digital age. The outcome of this investigation will not only impact Meta’s operations but could also set a precedent for how other tech companies approach user data and advertising practices in the future.
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