Meta’s ‘pay or consent’ model asks users to enable the processing of their personal data or pay a monthly fee.
The European Commission considers that Meta’s binary decision to force citizens to either pay or give up their data to use the service does not comply with the Digital Market Act (DSA), the bloc’s landmark law that aims to rein in the power excesses of Big Tech companies and ensure fairer competition in the digital world.
Meta, the parent company of Facebook and Instagram, has been designated a “gatekeeper” under the DSA and is subject to stricter obligations.
In reaction to the law, Meta introduced in November 2023 a new advertising system that asks users to choose between two options:
- Use the app free of charge but allow the processing of data.
- Stop the processing of data but pay a monthly fee to use an ad-free app.
In its preliminary findings, released on Monday, the Commission says this binary choice is not compliant with the DMA because it “forces users to consent to the combination of their personal data and does not offer them a less personalised but equivalent version of Meta’s social networks.”
In other words, access to the app’s features varies according to what users choose.
“Gatekeepers cannot make use of the service or certain functionalities conditional on users’ consent,” the Commission says.
An intermediate model, in which Meta customers who do not give the green light to track their data can nevertheless enjoy a similar service without personalised ads, would be Brussels’ preferred option.
If the preliminary findings are confirmed, the Commission will be entitled to adopt a non-compliance decision that can lead to fines of up to 10% of Meta’s total world turnover.
Such a scenario could be avoided if the company if the company offered remedial measures to align its business model with the DMA provisions.
“Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” a Meta spokesperson said.
The company has offered to cut the cost of its subscription service but is “still awaiting regulatory feedback,” the spokerperson noted.
Personal data is an extremely valuable asset for digital companies as it enables them to offer advertisers a tailor-made path to potential consumers. Meta generates more than 95% of its revenue from advertising.
This article has been updated to include Meta’s reaction.
