Meta Faces EU Antitrust Charges Over Ad Model

The tech giant’s ‘pay or consent’ ad model violates the bloc’s new digital competition law, according to the European Commission

European Union antitrust regulators have charged that Meta, the parent company of Facebook, is in violation of the bloc’s landmark tech regulations with its new ad-supported social networking service.

The European Commission (EC) has declared that the social media company’s recently introduced ‘pay or consent’ advertising model is in breach of the EU’s Digital Markets Act (DMA). The tech firm’s policy presents users with the choice of either paying a subscription fee or allowing the company to utilize their data for targeted advertising.

“According to the Commission’s preliminary assessment, this binary choice compels users to consent to the combination of their personal data and fails to provide them with a less personalized but equivalent version of Meta’s social networks,” regulators stated in a press release.

A Meta spokesperson told CNBC that its ad-supported subscription model “adheres to the direction of the highest court in Europe and complies with the DMA.”

“We eagerly anticipate further constructive dialogue with the European Commission to bring this investigation to a successful conclusion,” the spokesperson said.

Meta implemented the new model for Facebook and Instagram in Europe last November, following the EU’s ruling that it must obtain consent before displaying ads to users and offer an “alternative” version of its service that does not rely on data collection for advertising.

The US company previously stated that it introduced the subscription offer in response to the EU ruling.

However, according to the EC, Meta’s ad-supported model failed to comply with the DMA because it does not allow users to opt for a less personalized but equivalent experience.

“Our aim is to empower citizens to take control over their own data and choose a less personalized ads experience,” EU antitrust chief Margrethe Vestager said.

The accusations leveled against Meta are the most recent in a series of actions taken by the EC targeting Big Tech since the DMA came into effect in March. The law aims to crack down on anti-competitive practices by large digital companies and compel them to open up their services to competitors.

Last week, the watchdog issued its first DMA charge against another US tech giant, alleging that the Apple App Store violates its rules by preventing app developers from directing users to alternative options.

Under the DMA, companies could face fines of up to 10% of their global annual revenue if they fail to comply with EU regulations, or up to 20% in the event of repeated infringements.

In Meta’s case, such a penalty could reach as high as $13.4 billion, based on the company’s 2023 annual earnings numbers, according to CNBC.