The European Commission, the EU’s executive arm, announced on Monday that Meta’s “pay or consent” advertising model is in breach of the bloc’s Digital Markets Act. Meta introduced this model in the EU in 2023 after European regulators ruled in 2022 that users must have the option to opt out of personalized ads based on their activity on social platforms like Facebook and Instagram. The model requires users to pay a fee monthly to avoid seeing ads on these platforms, or they can choose to receive personalized ads by using a free version.
According to the EU regulators, the choice provided by Meta between paying for a subscription without ads or receiving personalized ads forces users to consent to the combination of their personal data without providing them with a less personalized but equivalent option. Meta now has an opportunity to respond in writing to these initial findings before the EU concludes its investigation within the next 12 months, which began on March 25. If Meta is found to be non-compliant, it could face fines of up to 10% of its global revenue.
A spokesperson from Meta stated that the subscription option for no ads aligns with the direction set by the highest court in Europe and complies with the DMA. They expressed their readiness to engage in constructive dialogue with the European Commission to resolve the investigation. Last year, Meta was fined $1.3 billion for transferring Facebook users’ data to the US, facing additional scrutiny from EU regulators.
Meta is not the only tech giant under investigation for violating the Digital Markets Act. Apple has also been informed by the European Commission of initial findings that its App Store rules breach the DMA by restricting app developers from guiding consumers to alternative channels for offers and content.