European Commission says Meta’s pay-or-consent model violates rule

The EU’s executive branch on Monday said it found a new Meta business model violates the bloc’s Digital Markets Act, which regulates dealings by big tech companies. Meta’s Facebook and Instagram introduced a no-ads subscription option last year in Europe. Under the model, users who consent to be tracked receive free access to the app funded by targeted ad revenue. Those who do not consent can still use the app while avoiding activity tracking by paying for an ad-free tier.

Platforms can not make app services or certain functionalities conditional on users’ consenting to be tracked, the commission said in a press release on Monday. Users who refuse to give personal data should still have free access to a similar but less personalized version of the app, the commission added. The EU wants citizens empowered to take control of their data, said Margrethe Vestager, the commission’s executive vice president in charge of competition policy.

Will the EU punish Meta? The EU’s report is only preliminary, which gives Meta time to redress the concerns before charges are formally filed. The Commission could fine Meta for up to 10 percent of the platform’s gross revenue if the issues are not redressed. Meta reported just over $130 billion in international revenue last year, meaning Meta could be on the hook for around $13 billion if the commission files charges. The company could also be charged up to 20 percent of global revenue for repeat offenses. The EU could also force Meta to sell parts of the business or bar it from acquiring more services related to the non-compliance.

How has Meta responded to the committee’s findings? A user subscription for no ads follows the direction of Europe’s highest court and complies with the EU’s Digital Markets Act, a Meta spokesperson told WORLD. The company will continue constructive dialogue with the EU and close the investigation, the spokesperson added.

Meta’s vice president of global affairs, Nick Clegg, penned an opinion piece warning Europe that tech regulation does not support innovation. He wrote that Europeans needed to play to their strengths to reverse the economic decline. Europe’s regulatory laws make companies hesitant to roll out new products there, he added.

Dig deeper: Read my report with Mary Jackson in WORLD Magazine about states suing Facebook and Instagram for harming kids and teens.