The European Union pointed out on Monday that Meta, the parent company of Facebook, violating the EU’s landmark Digital Markets Act by implementing a “pay or accept” advertising model.
At the end of last year, Meta introduced a service called “Ad-Free Subscription” that allows European users of Facebook and Instagram to pay €12.99 (14 USD) per month to access an ad-free version of the services. Another option is to accept a personalized advertising version.
The European Commission stated on Monday that they believe the binary choice of forcing users to agree to the use of their personal data or accept ads fails to provide them with an alternative, less personalized version of Meta’s social network.
Margrethe Vestager, the EU’s competition chief, stated, “We want to empower citizens to control their own data and choose a less personalized advertising experience.”
If the interim findings of the EU Commission’s investigation are confirmed, the EU may impose a fine on Meta equal to 10% of its global annual revenue under the milestone Digital Markets Act. Based on the company’s 2023 performance, the fine could total $13.5 billion. The Commission aims to conclude the investigation by March of next year.
Privacy activists and watchdog organizations have also raised concerns about Meta’s advertising model.
Meta has disputed the Commission’s findings, stating that their model complies with the ruling of the European Court of Justice.
A Meta spokesperson told Reuters, “The ‘Ad-Free Subscription’ follows the guidance of the European Court of Justice and complies with the Digital Markets Act. We look forward to engaging in constructive dialogue with the EU Commission to bring this investigation to an end.”
Last year, the European Court ruled that a company could offer an “alternative version” service that does not rely on data collection for advertising. Meta had previously cited this ruling as one of the reasons for introducing subscription services.
In the previous week, the EU Commission accused Apple of preventing app developers from directing consumers to use cheaper services, thereby violating the Digital Markets Act. Regulatory authorities are also investigating Google’s parent company, Alphabet, under the new law.
The Digital Markets Act came into effect in March this year, requiring dominant online platforms (the so-called “gatekeepers”) to provide users with more choices and offer more competition opportunities to rival companies. These platforms typically collect personal data for use in digital advertising services, both within their own services and third-party services.
(*This article is based on reporting from CNN.)