Meta charged with violating EU antitrust rules over ad-supported subscription service – NBC 6 South Florida

• 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 about privacy.
• If the Commission finds in its final findings that Meta has breached EU antitrust rules, the company could face a fine of up to $13.4 billion.

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

The European Commission, which is the executive body of the EU, has labeled its 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 its processing of their data to personalize ads. The service was launched for Facebook and Instagram in Europe last year.

“The Commission’s preliminary view 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,” the 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, which ruled the company could offer an “alternative” version of its service that did not require data collection for advertising.

Meta has previously cited this ruling as a reason for introducing a subscription offer.

In its statement Monday, the commission said Meta’s ad-supported offering does not comply with the DMA 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 service based on “personalized ads.”

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

The second reason given by the European Union is that Meta’s ad-supported service does not allow users to exercise their right to “opt in” to have their personal data used to target online advertisements to them.

High fines are at stake

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 can face potentially huge fines under the DMA and could end up paying up to 10% of their global annual revenue. For repeat violations, that amount could rise to 20%.

In Meta’s case, if the commission’s final findings find it violated the DMA, the company could be subject to a fine of up to $13.4 billion, based on the company’s annual profits for 2023.

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

The commission’s investigation, which began in March alongside two other investigations into tech giants Apple and Alphabet, is expected to conclude within 12 months of the proceedings being opened.