Meta, the parent company of Facebook, is facing accusations from EU regulators regarding its ad-supported subscription model. The European Commission has raised concerns about Meta’s compliance with the bloc’s antitrust rules, particularly with regards to the introduction of a “pay or consent” model for its social networking services.
The Commission has criticized Meta’s ad-supported subscription option, which requires users to either pay for an ad-free experience or consent to their data being processed for personalized advertising. According to regulators, this binary choice does not provide users with a less personalized but equivalent version of Meta’s social networks, as required by the EU’s Digital Markets Act (DMA).
A spokesperson for Meta defended the company’s ad-supported subscription model, stating that it aligns with the European Court of Justice’s ruling and complies with the DMA. Meta introduced this new model following a previous ruling that companies could offer an alternative service that did not rely on data collection for advertising purposes.
The European Commission outlined two key reasons why Meta’s ad-supported offering fails to comply with the DMA. Firstly, the model does not allow users to opt for a service that uses less personal data while still being equivalent to the personalized ads-based service. Secondly, users are not able to freely consent to the use of their personal data for targeted online advertising.
Enforcement of the DMA
The EU’s Digital Markets Act officially came into force in March of this year with the aim of cracking down on anti-competitive practices by large digital companies. Companies found to be in violation of the DMA can face hefty fines, amounting to as much as 10% of their global annual revenue. In the case of Meta, a potential penalty of $13.4 billion could be imposed based on the company’s 2023 earnings.
After receiving the preliminary findings from the EU, Meta will have an opportunity to defend itself in writing before the conclusion of the Commission’s investigation. The probe, which began in March alongside similar investigations into tech giants Apple and Alphabet, is expected to be completed within 12 months.
Meta’s ad-supported subscription model has come under scrutiny from EU regulators for allegedly violating antitrust rules. The company must now address the concerns raised by the Commission and defend its practices to avoid potentially significant penalties under the DMA. The outcome of this investigation will have far-reaching implications for Meta and other tech giants operating in the European market.
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