The European Commission has informed Meta of its initial findings, stating that Meta’s “pay or consent“ advertising model does not comply with the Digital Markets Act (DMA). According to the Commission, this model forces Facebook and Instagram users to either agree to combine their data for personalised ads or to pay for an ad-free experience without offering a less personalised alternative.
“Our investigation aims to ensure contestability in markets where gatekeepers like Meta have been accumulating personal data of millions of EU citizens over many years. Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act. And we want to empower citizens to be able to take control over their own data and choose a less personalised ads experience,“ Margrethe Vestager, Executive Vice-President in charge of competition policy, explained.
Online platforms often collect personal data from their own and third-party services to provide advertising. Because of their dominance in digital markets, these platforms, known as gatekeepers, have imposed terms of service on their large user base, allowing them to collect vast amounts of personal data. This has given them a significant advantage over competitors and created high entry barriers in the online advertising and social networking markets.
Under Article 5(2) of the DMA, gatekeepers must obtain users’ consent before combining their data from the core platform and other services. Users who decline consent should have access to a less personalised but equivalent alternative. Gatekeepers are prohibited from making certain functionalities or services conditional on users’ permission.
As a response to regulatory changes in the EU, Meta introduced a binary “pay or consent“ offer in November 2023 for EU users of Facebook and Instagram. Users must now choose between a monthly fee for a subscription to an ad-free version of the social networks or free access to a version of the platforms with personalised ads.
However, in collaboration with relevant data protection authorities, the Commission has raised concerns about Meta’s model. The Commission’s view is that the model needs to sufficiently empower users to choose a service that uses less of their personal data while still being equivalent to the ‘personalised ads’ service. Users should have the right to freely consent to the use of their personal data. To comply with the DMA, users who do not consent should still have access to a similar service that uses less of their personal data for personalised advertising.
The Commission provided Meta with the opportunity to defend itself. The investigation will conclude within 12 months. Non-compliance may result in fines of up to 10% of Meta’s global turnover, with the possibility of additional remedies for systematic non-compliance. Importantly, the Commission is actively working with Meta to achieve effective compliance, fostering hope for a positive resolution.
