LONDON (AP) — European Union regulators accused social media company Meta Platforms on Monday of breaching the bloc’s new digital competition rulebook by forcing Facebook and Instagram users to choose between seeing ads or paying to avoid them.
Meta began giving European users the option in November of paying for ad-free versions of Facebook and Instagram as a way to comply with the continent’s strict data privacy rules.
Users can pay at least 10 euros ($10.75) a month to avoid being targeted by ads based on their personal data. The U.S. tech giant rolled out the option after the European Union’s top court ruled Meta must first get consent before showing ads to users, in a decision that threatened its business model of tailoring ads based on individual users’ online interests and digital activity.
The European Commission, the EU’s executive arm, said preliminary findings of its investigation show that Meta’s “pay or consent” advertising model was in breach of the 27-nation bloc’s Digital Markets Act.
Meta’s model doesn’t allow users to exercise their right to “freely consent” to allowing their personal data from its various services, including Facebook, Instagram, Marketplace, WhatsApp, and Messenger, to be combined to target them with personalized online ads, the commission said.
Meta’s model also doesn’t give users the option of a service that’s less personalized but still equivalent to its social networks, it said.
“Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA,” Meta said in a statement. “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”
The commission had opened its investigation shortly after the rulebook, also known as the DMA, took effect in March. It’s a sweeping set of regulations aimed at preventing tech “gatekeepers” from cornering digital markets under threat of heavy financial penalties.
One of the DMA’s goals is to rein in the power of Big Tech companies that have collected vast amounts of personal data on their users, giving them an edge on rivals competing in online ad or social media services. The commission indicated that in order for Meta to comply, it would like to see an option that doesn’t rely on a user’s full personal information being shared for advertising.
“The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access,” European Commissioner Thierry Breton, who oversees the bloc’s digital policy, said in a statement.
Meta now has a chance to respond to the commission, which must wrap up its investigation by March 2025. The company could face fines worth 10% of its annual global revenues, which could run into the billions of euros.
Under the Digital Markets Act, Meta is classed as one of seven online gatekeepers while Facebook, Instagram, WhatsApp, Messenger and its online ad business are among two dozen “core platform services” that need the highest level of scrutiny.
Monday’s decision is the latest in flurry of regulatory activity by Brussels targeting Big Tech companies. The EU leveled its first charges under the DMA a week ago, accusing Apple of of preventing app makers from pointing users to cheaper options outside its App Store. It also recently charged Microsoft with violating the bloc’s antitrust laws by by bundling its Teams messaging and videoconferencing app with its widely used Office business software.
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European Union regulators have accused Meta Platforms of violating the EU’s new digital competition rules by giving Facebook and Instagram users the ultimatum of seeing ads or paying to avoid them. Meta introduced the option for European users to pay for ad-free versions of the platforms in November to adhere to the strict data privacy rules in the region. Users could pay a minimum of 10 euros a month to dodge ads customized based on their personal data. The move came after the EU’s top court ruled that Meta must receive consent before displaying ads to users, jeopardizing its ad-targeting business model.
The European Commission, the EU’s executive body, stated that Meta’s “pay or consent” advertising approach breached the Digital Markets Act of the 27-nation bloc. According to preliminary investigation findings, Meta’s model restricts users from freely consenting to their personal data across Facebook, Instagram, Marketplace, WhatsApp, and Messenger to facilitate targeted personalized online ads. Furthermore, the model fails to offer an alternative service that is less personalized but comparable to its social networks.
In response, Meta defended its ad-free subscription model, claiming it aligns with the direction set by the European court and is in compliance with the DMA. The company expressed readiness for constructive discussions with the European Commission to resolve the investigation. The commission initiated the probe after the DMA came into effect in March, aiming to prevent tech “gatekeepers” from dominating digital markets with potential severe financial penalties.
The DMA’s objective includes curbing the dominance of Big Tech firms that gather extensive user data, giving them an advantage over competitors in online advertising and social media services. The commission indicated that Meta should provide an option that does not rely on sharing a user’s complete personal information for advertising purposes. European Commissioner Thierry Breton emphasized that the DMA empowers users to control their data usage and ensures fair competition for innovative companies against tech giants regarding data access.
Meta is now granted an opportunity to respond to the commission before the investigation concludes by March 2025. The company faces the risk of fines amounting to 10% of its global annual revenues, potentially totaling billions of euros. Meta is classified as one of seven online gatekeepers under the Digital Markets Act, with its platforms and online ad business falling under two dozen “core platform services” subject to rigorous scrutiny.
The EU’s move against Meta is part of a series of regulatory actions by Brussels targeting major tech enterprises. Recently, the EU made its first charges under the DMA against Apple, accusing the company of impeding app developers from directing users to cheaper alternatives outside the App Store. Additionally, Microsoft faced charges for violating the EU’s antitrust laws by bundling its Teams app with the widely-used Office software suite.
