The European Commission has accused social media company Meta Platforms of violating the European Union's new digital competition regulation by forcing Facebook and Instagram users to watch or pay to skip ads.
In response to European regulatory changes, Meta has introduced a binary “pay or accept” offer in November 2023, which will require EU users of Facebook and Instagram to choose between subscribing to ad-free versions of these social networks for USD 11.61 (EUR 10.75) per month, or accessing versions of these social networks with personalized ads for free.
The Commission has taken the preliminary view that Meta’s “pay or consent” advertising model does not comply with the Digital Marketing Act (DMA) because it does not allow users to opt for services that use less personal data, but is otherwise equivalent to “personalized advertising” based services.
The Commission also believes that the feature prevents users from exercising their right to “freely consent” to the combination of their personal data from various services, including Facebook, Instagram, Marketplace, WhatsApp and Messenger, to serve them personalized ads.
To ensure compliance with the DMA, users who do not consent must still be able to access an equivalent service that uses less personal data, in this case for advertising personalisation, the Commission said.
The Commission has given Mehta an opportunity to review the documents in the Commission's investigation file and to submit a written response to the Commission's preliminary findings. The Commission plans to conclude its investigation within 12 months from the start of hearings on March 25, 2024.
In case of violation, the Commission may impose fines of up to 10% of Meta's worldwide revenues, and in case of repeated violations, the fines may increase to up to 20%.
Margrethe Vestager, the European Commission's executive vice-president for competition policy, said: “Our investigation aims to ensure contestability in a market where gatekeepers like Meta have accumulated the personal data of millions of EU citizens for years. And we want citizens to have control over their data and be able to choose a less-personalized advertising experience.”
Thierry Breton, European Commissioner for the Internal Market, said: “Today we take an important step towards ensuring Meta's full compliance with the DMA, which is designed to give users back the power to decide how their data is used and enable innovative companies to compete on an equal footing with tech giants for data access.”
In response, a Meta spokesperson told MARKETING-INTERACTIVE that its ad-free subscriptions follow the instructions of the European Supreme Court and comply with the DMA: “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”
Don't miss: EU privacy watchdog says Meta should let users opt out of targeted ads for free
Earlier this April, the European Data Protection Board (EDPB) told Meta that a “pay-or-consent” model, which offers users the choice of either consenting to the processing of their personal data for behavioral advertising purposes or paying a fee, would make it impossible for large online platforms to meet the requirement of valid consent.
MARKETING-INTERACTIVE has asked the EU for a statement.
Related article:
Meta’s new generation of AI features can impact advertising efficiency, but only if you start from the right starting point
Meta's next generation AI features aim to make ad creation a lot easier
Report finds X, Google, Meta lack advertising transparency
