EU accuses Meta of violating competition rules with 'pay-or-consent'

Meta claims greenlight given by earlier verdict, EU disagrees

EU accuses Meta of violating competition rules with 'pay-or-consent'

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EU accuses Meta of violating competition rules with 'pay-or-consent'

This model effectively states that users who do not consent to having their personal data processed for targeted advertising must pay a fee. Meta charges €9.99 per month on the web and €12.99 on Facebook and Instagram mobile apps for the ad-free service.

This week the the European Commission (EC) announced preliminary findings that Meta's model is not compliant with the DMA, since it fails to offer users a service that uses less of their personal data, and does not allow them to consent freely to Meta's profiling them using their data. The EC began its investigation in March this year when the DMA was enacted. It is expected to conclude in March 2025.

Meta's case rests on a Court of Justice of the European Union (CJEU) judgement last July (Meta Platforms Inc and Others v Bundeskartellamt) which said that under the GDPR: "Users must be free to refuse individually, in the context of the contractual process, to give their consent to particular data processing operations not necessary for the performance of the contract, without being obliged to refrain entirely from using the service."

However the Court also said: "... users are to be offered, if necessary for an appropriate fee, an equivalent alternative not accompanied by such data processing operations."

Meta has taken this as an endorsement for charging for its services.

"Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA," Meta said in a statement on Monday. "We look forward to further constructive dialogue with the European Commission to bring this investigation to a close."

But that case concerned the GDPR, not the DMA, and critics have pointed out that the judgement was not an endorsement of Meta's pay-or-consent model.

"For there to be a free choice for the user and a valid choice for the user […] the consumer needs to be in a position to choose an alternative version of the service which relies on non–personalisation of the ads," said an EU official, as reported by Euractive.

Meta plans to fight the findings, which could result in fines of up to 10% of the company's worldwide turnover, or more than $10 billion, with even larger fines of up to 20% possible for a repeat offence.

The EC is investigating other tech companies for DMA compliance, including Amazon, Microsoft, Alphabet, ByteDance and Apple, all of which are designated as "gatekeepers". Apple and Microsoft are facing potential charges over restrictions on the App Store and the bundling of Teams into M365.