European Commission Challenges Meta’s ‘Pay or Consent’ Ad Model Under Digital Markets Act

The Commission has preliminarily concluded that this “binary” choice presented to users does not comply with the Digital Markets Act (DMA). According to the DMA, users who do not give consent should still have access to an equivalent service that uses less of their personal data for personalized advertising.

However, Meta, which owns and operates social networks – Facebook, Instagram, Threads, and WhatsApp,  maintains that their model is compliant with EU regulations. A company spokesperson stated that their ad-free subscription follows the direction of the highest European court and complies with the DMA.

If the EU determines that Meta has failed to comply with its rules, the company could face a potential fine of up to 10% of its global revenue.

This development comes shortly after EU regulators accused Apple of breaching the same laws regarding its App Store, marking the first instance of a company being found in violation of the DMA.

The situation highlights the rapid enforcement of the DMA, a relatively new addition to the EU’s digital regulatory framework. Industry experts note that many questions remain about the implementation and intersections of the EU’s expanded digital regulation toolbox.

As enforcement moves forward swiftly and consequentially, there is limited time to fully address these questions. This case underscores the evolving nature of digital regulation in the EU and the challenges tech companies face in adapting to new legal requirements.

The European Commission has intensified its oversight of Meta, which, along with other tech giants, has been designated as a “gatekeeper” under new EU rules. These regulations aim to maintain fair conditions and competitiveness on digital platforms.

The Commission’s investigation, launched in late March, seeks to ensure that competitors can compete in the digital advertising market “where gatekeepers like Meta have been accumulating personal data of millions of EU citizens over many years,” according to Margrethe Vestager,  the Commission’s executive vice-president and competition policy chief.

This probe aims to conclude within the next 12 months and is part of the broader effort to implement the Digital Markets Act, which imposes stricter obligations on major tech firms designated as gatekeepers.

The case highlights the ongoing tension between tech companies’ business models and the EU’s efforts to protect user privacy and maintain fair competition in the digital marketplace.