Meta faces EU antitrust crackdown over data consent issues

Even though they concern the same law, the two cases differ in many respects.

Apple is accused primarily of making it difficult and excessively expensive for app developers to steer iOS users to cheaper off-platform offerings where Apple cannot take a lucrative cut of revenue. However, Meta is in trouble for charging a hefty monthly fee to Facebook and Instagram users who don’t “opt-in” to being tracked on Meta and third-party services for ad targeting purposes. This allegedly violates the DMA because, in the words of the European Commission:

“(The Meta model) does not allow users to choose a service that uses less of their personal data but is in other respects equivalent to a service based on ‘personalized advertising’ (and therefore) does not allow users to exercise their right to freely consent to the combination of their personal data “

One case involves restricting developers; the second concerns rail users. However, both focus on core business models. Apple still makes most of its money from selling iPhones, but services (including App Store commissions) are the second most important part of its revenue, and may one day be the most important. Meta’s user data is, and likely always will be, its lifeblood. Both cases therefore have huge implications for their targets’ future income flows.

The Commission’s action against Meta essentially amounts to enforcing data protection law through antitrust measures.

The DMA rules reflect a growing tendency among tech antitrust regulators to treat reams of data as competitive assets that build moats. The Commission cites “potential benefits over competitors who don’t have access to as much data, which creates high barriers to providing online advertising and social networking services.” But while there’s a solid theoretical basis for this trend, it’s hard to escape the impression that regulators are also adopting this tactic because others have failed.

What Meta did is not simply allegedly illegal under the DMA; it is also very likely to violate the General Data Protection Regulation (GDPR), which came into force over six years ago. However, GDPR enforcement has been piecemeal and painfully slow, largely because it is the responsibility of underfunded national privacy regulators (in Meta’s case, it was the Irish Data Protection Commission). To avoid this problem, the DMA is putting the European Commission itself in the role of enforcer, while also demanding that the case be resolved within a year of initiating the investigation – which for both Meta and Apple makes next March the deadline to avert disaster.

DMA also threatens much higher fines than the 4% of global annual revenue stipulated in the GDPR – up to 10% or even 20% if a company persistently breaks the rules.

Funnily enough, Meta only attempted a “pay or consent” tactic because GDPR-based court rulings have removed all other legal options to profit from users’ data without their actual, voluntary consent. “The ad-free subscription is in line with guidance from the Supreme Court of Europe,” Meta protested in a statement today, which also said its model “is DMA compliant.”

So in a sense, privacy law led Meta to this position, and now antitrust law is going all the way. More news below.

David Meyer

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NEWSWORTHY

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BEFORE YOU GO

TikTok’s magic lamp. TikTok clearly has ambitions to launch a chatbot in the US, as it has filed to register a trademark for a chatbot called “Genie,” reports Semafor. There aren’t many details — TikTok has not commented on the matter — but it would certainly be bold for the company to enter such a controversial and competitive space while it faces a potential ban in the US if it doesn’t find a local buyer.

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