EU regulators have accused Meta, the parent company of Facebook, of failing to comply with the bloc’s antitrust rules regarding its new ad-supported social networking service. The Commission has criticized Meta for offering a “pay or consent” model, where users must either pay to use Meta’s platforms ad-free or consent to their data being used for personalized advertising. This approach has been deemed problematic as it limits users’ choices and fails to provide a less personalized but equivalent version of Meta’s social networks.
Response from Meta
In response to the allegations, a spokesperson from Meta stated that the company’s ad-supported subscription model aligns with the direction of the highest court in Europe and complies with the Digital Markets Act (DMA). Meta introduced this new model following a ruling from the European Court of Justice, which suggested that companies should offer an alternative version of their services that do not rely on data collection for ads. However, the European Commission remains unconvinced and has raised concerns about the lack of a less invasive data collection option for users.
The EU regulators have pointed out two main reasons why Meta’s ad-supported model does not comply with the DMA. Firstly, the service does not provide users with the choice to opt for a less intrusive data collection method while still receiving an equivalent service. Secondly, users are not given the opportunity to freely consent to their personal data being used for targeted online advertising. The Digital Markets Act, which came into effect earlier this year, is designed to address anti-competitive practices by large digital companies and ensure fair competition in the market.
Companies found in breach of the DMA can face significant fines, with penalties amounting to up to 10% of their global annual revenue. In Meta’s case, the company could potentially be fined as much as $13.4 billion based on its 2023 earnings. The EU’s investigation into Meta’s practices will continue for the next 12 months, during which the company will have the opportunity to defend itself in writing. This probe is part of a broader effort by the Commission to enforce antitrust regulations on tech giants, including Apple and Alphabet.
The accusation by EU regulators against Meta highlights the ongoing scrutiny faced by large tech companies regarding their business practices. The outcome of this investigation will have significant implications for Meta and could potentially lead to substantial financial consequences. It remains to be seen how Meta will address these concerns and whether any changes will be made to its ad-supported model to comply with the EU’s antitrust rules.
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