Meta accused of violating EU antitrust rules over ad-supported subscription service – NBC New York

• The European Commission, the EU’s executive arm, has described Meta’s ad-supported subscription option as a “pay or opt-in” model, meaning users must either pay to use Meta’s ad-free platforms or consent to their data being processed to display personalized ads.
• Meta launched the service for Facebook and Instagram in Europe last year in response to legal concerns over privacy.
• If the Commission finds in its final findings that the company has breached EU antitrust rules, the company could face a fine of up to $13.4 billion.

Facebook’s parent company Meta was accused by EU regulators on Monday of failing to comply with landmark antitrust rules over its recently launched ad-supported social networking site.

The Commission has described the ad-supported subscription option as a “pay or agree” model — meaning users must either pay to use Meta’s ad-free platforms or consent to their data being processed to personalize ads. The service was launched for Facebook and Instagram in Europe last year.

“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 on Monday.

A Meta spokesperson told CNBC in a statement that its ad-supported subscription model “follows the guidance of Europe’s highest court and is compliant with the DMA.”

“We look forward to continuing constructive dialogue with the European Commission to conclude this investigation,” the spokesman added.

Meta introduced the new model in response to a ruling last year by the European Court of Justice, the EU’s highest court, that the company can offer an “alternative” version of its service that does not involve collecting data for advertising.

Meta had already pointed to this ruling as the reason for introducing the subscription offer.

In its statement on Monday, the Commission said Meta’s ad-supported offering is not DMA-compliant for two key reasons: first, it does not allow users to choose a service that uses less personal data but is still equivalent to a “personalized advertising-based service.” .

Regulators said users should still have the right to “access an equivalent service that uses less of their personal data, in this case to personalize ads.”

Another reason given by the EU is that Meta’s ad-supported service does not allow users to exercise their right to “consent” to the use of their personal data to target them with online advertising.

High penalties are involved

The EU’s Digital Markets Act, or DMA, officially became enforceable in March of this year. The law aims to clamp down on anti-competitive practices by big digital companies, as well as forcing them to open up some of their services to competitors.

Companies could face potentially huge fines under the DMA and could end up paying up to 10% of their global annual revenues. In case of repeated violations, this amount may increase to 20%.

In Meta’s case, if the Commission’s final findings found it had violated the DMA, it could face penalties of up to $13.4 billion, based on the company’s 2023 annual profits.

After receiving the EU’s preliminary findings, Meta now has the chance to defend itself in writing.

The Commission’s inquiry, which was launched in March along with two other investigations into tech giants Apple and Alphabet, will end within 12 months of its initiation.