EU accuses Meta of antitrust violations over ad-supported subscription service

The European Union (EU) has accused tech giant Meta of failing to comply with the Digital Markets Act (DMA) after its ad-supported, pay-or-agree subscription service was found to be in breach of antitrust rules.

The Commission in its preliminary findings revealed that this model forces users to consent to the combination of their data and does not provide them with a less personalized but equivalent version of Meta’s social networks.

Significantly, the Commission preliminarily considers that Meta’s “pay or consent” advertising model does not comply with the DMA because it does not meet the requirements.

Two areas where this model violates antitrust laws are highlighted:

• It does not allow users to choose a service that uses less of their personal data but otherwise it is equivalent to a service based on “personalized advertising”.
• Does not allow users to exercise their right to freely express consent to combine their personal data.

Recall that Meta introduced the “pay or agree” model in November 2023, in which EU Facebook and Instagram users must choose between two options. The first option is to subscribe for a monthly fee to the ad-free version of these social networks, and the second is to access the version of these social networks with personalized ads for free.

It is worth noting that Meta opted for this model because it ran into legal trouble earlier that same year when the European Data Protection Board (EDPB) issued a binding decision banning the platform from engaging in targeted advertising across the EU/EEA.

Meanwhile, in response to the latest EU findings, a Meta spokesperson told CNBC that its ad-supported subscription model complies with guidelines from Europe’s highest court and is compliant with the DMA.

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

To ensure compliance with the DMA, the EU said that users who do not consent should still have access to an equivalent service that uses less of their data, in this case to personalize ads. The Commission coordinated with the relevant data protection authorities during the investigation.

By sending its preliminary findings, the Commission informs Meta of its preliminary view that the company is in breach of the DMA.

Meta can now exercise its rights of defence by examining the documents in the Commission’s investigation file and responding in writing to the Commission’s preliminary findings. The Commission will conclude its investigation within 12 months of opening of the proceedings on March 25, 2024.

In the event of non-compliance, the Commission can impose fines of up to 10% of the gatekeeper’s total global turnover. In the case of Meta, if found guilty, it could be fined up to $13.4 billion, based on the company’s 2023 annual results.