The European Commission accused Meta of violating the DMA

The European Commission (EC) has accused Meta - the company headed by Mark Zuckerberg - of violating the rules established by the Digital Markets Act (DMA) with the "consent or pay" advertising model it imposes on users of its platforms. According to Brussels, this practice forces users to accept the combination of their personal data or to pay a fee to access an ad-free version, which violates EU regulations.

Following regulatory changes introduced by the EU in November last year, Facebook and Instagram's parent company introduced a binary option where the user must either pay or consent. Specifically, Facebook and Instagram users must choose between a monthly subscription without ads on the social networks or the free option in which personalized ads are displayed.

In its preliminary analysis, the Community Executive considered that the consent or pay option in its advertising model does not meet the requirements of European regulations. It pointed out that it does not give users the option to choose a service that uses a smaller amount of personal data than the personalized ads service. In addition, it does not allow users to freely choose whether they want to consent to their personal data being used.

"Our research aims to ensure contestability in markets where gatekeepers such as Meta have been accumulating personal data of millions of EU citizens for many years. Our preliminary view is that Meta's advertising model does not comply with the Digital Markets Act. And we want to empower citizens to take control of their own data and choose a less personalized advertising experience," said Margrethe Vestager, Vice President of the European Commission, in charge of competition policy.

The EU wants Meta to comply with the DMA

Brussels has stated that to ensure compliance with the DMA, users who do not give consent must continue to have access to an equivalent service that uses less personal data, in this case, for the personalization of advertising. The Commission has coordinated with the competent data protection authorities throughout the investigation.

As a result, the EC has warned Meta that it breaches the DMA. Following this preliminary analysis, the company now has the opportunity to exercise its right of defense by examining the documents in the Commission's investigation file and responding in writing to the Commission's preliminary conclusions. The Executive will conclude its investigation within 12 months of the initiation of proceedings on March 25, 2024.

If Brussels concludes that Meta has failed to comply with EU regulations after the 12-month investigation, it may impose fines of 10% of annual worldwide turnover, which may rise to 20% in the case of repeated infringements.

In addition, in case of systemic breaches, the EC can also take additional corrective measures, such as forcing a platform to sell a business or parts of it, or prohibiting it from acquiring additional services related to the sector in which there has been a systemic breach.

"Today, we take another important step towards ensuring Meta's full compliance with the DMA. Our preliminary view is that Meta's 'pay or consent' business model is in breach of the DMA. The DMA is there to give users back the power to decide how their data is used and to ensure that innovative companies can compete on a level playing field with tech giants in accessing data," stressed Thierry Breton, Internal Market Commissioner.

Often, online platforms collect personal data from users for online ad services. Given the technology giant's market position, it can impose conditions on its large user base and collect a large amount of personal data. This gives it a competitive advantage over other social networks that cannot access such a large amount of data and, in turn, raises the standards for advertising services on these platforms.

European regulations state that gatekeepers must seek users' consent to combine their personal data between designated core platform services and other services. If a user refuses such consent, they must have access to a less personalized but equivalent alternative. Online platforms cannot condition the use of the service or certain functionalities on users' consent.