Meta ‘pay or consent’ model accused of breaching EU Digital Markets Act

The Commission informed the social media giant on Monday of its preliminary findings that the binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta’s social networks.

Under Article 5(2) of the DMA, gatekeepers must seek users’ consent for combining their personal data between designated core platform services and other services, and if a user refuses such consent, they should have access to a less personalised but equivalent alternative.

Notably, gatekeepers cannot make use of the service or certain functionalities conditional on users’ consent.

In response to regulatory changes in the EU, Meta introduced in November 2023 a binary “pay or consent” offer whereby EU users of Facebook and Instagram have to choose between the subscription for a monthly fee to an ads-free version of these social networks, or the free-of-charge access to a version of these social networks with personalised ads.

The Commission takes the preliminary view that this “pay or consent” advertising model is not compliant with the DMA as it does not meet the necessary requirements set out under Article 5(2).

In particular, Meta’s model does not allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the “personalised ads” based service, and does not allow users to exercise their right to freely consent to the combination of their personal data.

To ensure compliance with the DMA, users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalisation of advertising.

Meta now has the right to reply to the Commission’s preliminary findings ahead of the conclusion of the investigation within 12 months from the opening of proceedings on 25 March 2024.

If the Commission’s preliminary views were to be ultimately confirmed, the Commission would adopt a decision finding that Meta’s model does not comply with Article 5(2) of the DMA.

In case of non-compliance, the Commission can impose fines up to 10 per cent of the gatekeeper’s total worldwide turnover. Such fines can go up to 20 per cent in case of repeated infringement.

Moreover, in case of systematic non-compliance, the Commission is also empowered to adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.

Margrethe Vestager, the Commission’s executive vice-president in charge of competition policy, said: “Our investigation aims to ensure contestability in markets where gatekeepers like Meta have been accumulating personal data of millions of EU citizens over many years.

“Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act — and we want to empower citizens to be able to take control over their own data and choose a less personalised ads experience.”

Thierry Breton, the commissioner for the internal market, said: “Today we make another important step to ensure full compliance with the DMA by Meta. Our preliminary view is that Meta’s ‘pay or consent’ business model is in breach of the DMA.

“The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access.”