In a major blow to the social media giant, the European Commission has announced that Meta’s “pay or consent” advertising model is in violation of the EU’s Digital Markets Act. The move comes after Meta introduced this model in the EU in 2023, following a ruling by European regulators in 2022 that users must have the option to opt out of personalized ads based on their activity on platforms like Facebook and Instagram.
Under this model, users are required to pay a monthly fee to avoid seeing ads on these platforms or they can choose to receive personalized ads by using a free version. However, according to EU regulators, this choice forces users to consent to the combination of their personal data without providing them with a less personalized but equivalent option.
Meta now has until next year to respond in writing to these initial findings before the EU concludes its investigation. If found non-compliant, Meta could face fines of up to 10% of its global revenue. A spokesperson from Meta said 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.
This news comes as Meta is already facing additional scrutiny from EU regulators after being fined $1.3 billion last year for transferring Facebook users’ data to the US. It also means that Meta is not alone in facing investigations for violating the Digital Markets Act – Apple has also been informed 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.