Meta faces EU antitrust charges over payment- or consent-based advertising model

Meta, the parent company of Facebook and Instagram, has been accused by EU antitrust regulators of failing to comply with the Digital Markets Act (DMA). The accusations stem from Meta’s recent introduction of a “pay or agree” advertising model, which has already drawn the ire of privacy regulators and activists. The model gives users a choice: agree to be tracked and receive a free service funded by advertising revenue, or pay for an ad-free experience.

The European Commission, in its role as the EU’s competition enforcer, found that this binary choice violates the DMA. The Commission’s preliminary findings, sent to Meta, suggest that the model forces users to consent to the combination of their personal data and does not provide a less personalized but equivalent version of Meta’s social networks.

“We want to give citizens the opportunity to take control of their own data and choose less personalized advertising,” Margrethe Vestager, head of the EU antitrust commission, said in a statement.

Meta defended its model, saying it was in line with the European Court of Justice (ECJ) ruling. “The ad-free subscription is in line with the guidelines of the highest court in Europe and is in line with the DMA. We look forward to continued constructive dialogue with the European Commission to conclude this investigation,” a Meta spokesperson said.

If Meta is found guilty of violating the DMA, the company could face fines of up to 10% of its global annual turnover. The commission has until March next year to conclude its investigation.

Activists and privacy watchdogs have also criticized Meta’s advertising model. Reuters was first to report that the EU’s antitrust watchdog would accuse Meta of failing to comply with DMA rules. The allegation comes a week after the EU issued its first DMA accusation against Apple for similar non-compliance.

Meta’s ad-supported subscription service, launched last November, was intended to address concerns raised by the ECJ ruling. The service requires users to pay for an ad-free experience or to consent to their data being used for personalized advertising. However, the Commission argues that this model does not provide users with an equivalent service that uses less personal data.

“The Commission’s preliminary position is that this binary choice forces users to consent to the combination of their personal data and does not provide them with a less personalized but equivalent version of Meta’s social networks,” regulators said in a statement.

The DMA, which came into force in March this year, aims to curb anti-competitive practices by large digital companies and force them to share parts of their services with rivals. Companies that violate the DMA could face hefty fines, potentially up to 10% of global annual revenue, and in the case of repeat violations, the fine could increase to 20%.

If Meta is found in violation of the DMA, it could face penalties of up to $13.4 billion based on its 2023 annual profits. Meta now has the opportunity to defend itself in writing before the Commission makes a final decision.

The Commission’s investigation, launched in March alongside probes into tech giants Apple and Alphabet, is expected to conclude within 12 months.