European Union regulators said today that Facebook’s parent company Meta could face huge fines for violating the Digital Markets Act with its “pay or consent” advertising model, in which users must either pay a fee to use Meta’s platform ad-free or consent to their data being processed for personalized ads.
According to a statement released today, this model prevents users from exercising their “right to freely consent” to the combining of their personal data. To comply, the EU said, Meta must offer “comparable services” to users who don’t provide the company with personal information.
“This alternative would force users to consent to the integration of their personal data without offering them an equivalent but less personalized version of the Meta social network,” the regulator wrote.
Meta has argued against the ruling, saying it created its current model last year under the direction of the European Court of Justice to specifically comply with the DMA.
“Subscriptions as an alternative to advertising are an established business model across many industries, and we designed our ad-free subscriptions to address several overlapping regulatory obligations, including with the DMA. We continue to negotiate constructively with the Commission,” a Meta spokesperson said.
The company said it wanted to continue its dialogue with EU regulators on the matter.
If found in violation, Meta could be fined a portion of its profits in Europe, up to $13.4 billion, according to the company’s latest financial report.
This marks the EU’s second crackdown on a tech giant in the past seven days. Last Monday, regulators found that Apple’s app store had violated competition law.
Why we care. Meta has made its fortune on targeted advertising, which is essentially illegal under GDPR, and regulators have expressed doubts about the company’s pay-per-view or consent model since it was first introduced. It will be interesting to see if Meta has a Plan B.
