The European Union said Monday that Meta’s “pay or consent” advertising model violates its new digital competition law, which both Apple and Microsoft have also been nailed for.
The EU said Meta’s policy “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,” which doesn’t comply with the Digital Markets Act.
Meta created the “pay or consent” model in response to EU regulatory changes, making Facebook and Instagram users in Europe choose between a paid ad-free version of the service or a free version with personalized ads. But the EU found this didn’t go far enough because it “does not allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the ‘personalised ads’ based service.
If the Commission comes to a final conclusion that Meta broke the DMA’s rules, the company could be fined as much as 10% of its worldwide revenue. Repeated violations of the law could shoot up fines to as much as 20%.
A final decision is required by March 25, 2025, or 12 months after regulators began investigating a slew of tech firms’ compliance with the DMA.
“Our investigation aims to ensure contestability in markets where gatekeepers like Meta have been accumulating personal data of millions of EU citizens over many years,” Margrethe Vestager, Executive Vice-President in charge of competition policy, said in a statement. “Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act. And we want to empower citizens to be able to take control over their own data and choose a less personalised ads experience.”
The EU accused Apple last month of failing to comply with the law by preventing app developers from freely directing consumers to alternative ways to make purchases.
It also said in June that Microsoft violated the law by including Teams in the Microsoft 365 suite — even if consumers don’t have a plan for the service — or by providing a free one-year trial in the Office 365 service, Microsoft is hurting competition.