Meta, the parent company of Facebook, has found itself in hot water with EU regulators over its ad-supported subscription model. The European Commission has accused Meta of failing to comply with the bloc’s landmark antitrust rules, specifically regarding the “pay or consent” model that the company introduced last year for Facebook and Instagram in Europe.
According to the Commission’s preliminary findings, Meta’s ad-supported subscription option forces users into a binary choice – either pay to use the platforms ad-free or consent to their data being processed for personalized advertising. The regulators argue that this model does not provide users with a less personalized but still equivalent version of Meta’s social networks, as required by the rules.
A spokesperson for Meta defended the ad-supported subscription model, stating that it aligns with the direction set by the highest court in Europe and complies with the DMA. The company introduced this new model in response to a ruling from the European Court of Justice, which stated that companies could offer an alternative version of their services that do not rely on data collection for ads.
The EU Commission highlighted two key reasons why Meta’s ad-supported offering fails to comply with the DMA. One is that it does not give users the option to choose a service that uses less personal data but still offers 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 ad personalization. The other reason cited is that the model does not allow users to freely consent to their data being used for targeted online ads.
The Digital Markets Act (DMA), which became enforceable in March, aims to crack down on anti-competitive practices by large digital companies. Under the DMA, companies like Meta could face hefty fines – potentially up to 10% of their global annual revenue. In Meta’s case, if found in violation, the company could potentially be fined as much as $13.4 billion based on its 2023 earnings. The company now has the opportunity to defend itself in writing against the Commission’s preliminary findings.
The investigation into Meta’s ad-supported subscription model will continue, with the EU Commission expected to reach a final decision within 12 months from the opening of proceedings. The outcome of this case could have significant implications for how large tech companies operate within the European Union and could set a precedent for future antitrust regulations in the digital space.
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