Preliminary findings from the European Commission’s inquiry into Meta’s binary advertising option for European users of Facebook and Instagram since last autumn reveal a glaring disparity with the EU’s Digital Markets Act.
Failure to comply with the ex ante market contestability regulation, implemented on Meta and similar “gatekeepers” since March 7, could be extremely costly for the adtech giant. Companies found guilty of non-compliance may face penalties reaching up to 10% of their global annual revenue, with repeat offenders risking fines equivalent to 20% of their worldwide turnover.
As a last resort, Meta may need to abandon its privacy-hostile business model, which demands users pay the “price” of surveillance-tinged advertisements as the cost of using its social media platforms.
The European Union has launched a formal investigation into Meta’s “pay or consent” data supply model, following sustained pressure from privacy advocates and consumer protection groups that have long argued the scheme contravenes EU data protection and consumer safety regulations.
Again in March, the Fee mentioned its involvement in the binary alternative Meta was providing – a scheme where customers of its social networks were requested to conform to monitoring and profiling, allowing the platform to serve microtargeted ads or opt out by paying up to nearly €13 per month (per account) for ad-free versions.
To achieve its Digital Markets Act (DMA) goal, the EU aims to curtail dominant gatekeepers’ abusive practices by focusing on the multiple benefits they derive from their market position – particularly in the realm of knowledge.
As Meta’s dominance in social networking translates into the ability to gather additional data from internet users to create detailed profiles, its advertising arm is granted an undue advantage over competitors, a concern that has led the EU to take issue with this practice. It is a requirement within the DMA’s guidelines that gatekeepers obtain individuals’ consent before resetting their dynamic tracking devices for advertising purposes. Meta argues that the adtech giant is neglecting its responsibility to provide users with a genuinely free and transparent choice to opt out of tracking.
The UK’s Financial Conduct Authority reported on Monday that Meta’s binary choice “compels users to agree to the combination of their personal data, ultimately failing to provide them with a less targeted yet equally accessible version of Meta’s social media platforms.”
Ahead of the official announcement, senior Meta officials underscored that as long as the company’s social media platforms remain freely accessible to users, the same features and services offered to those who decline to consent to data monitoring must also be available at no cost to customers.
In accordance with Article 5(2), gatekeepers are mandated to obtain customers’ explicit consent before combining their personal data between designated core platform providers (CPS) and other parties.
Meta’s social media platforms, Facebook and Instagram, along with its advertising division, are now classified as Covered Privacy Services (CPS) since , implying that the adtech giant must obtain explicit consent from users to track and profile their behavior in order to deliver so-called “personalized” advertisements.
Customers who decline Meta’s monitoring are entitled to access an alternative that is less personalized but equal in quality, and according to the Fee’s preliminary view, after a three-month investigation, it appears that Meta is violating this requirement by offering a paid subscription that does not provide equal access to the same information as free entry.
The regulation further clarifies that gatekeepers cannot conditionally offer services or functionality to users based on their consent.
In response to the EU’s findings, Meta’s spokesman, Matthew Pollard, issued a press statement via email, crediting the organization’s spokesperson. As the CJEU ruling in Weltimmo explicitly validated the use of consent-based subscription models, stating that “the processing of personal data without consent is only permitted if it is necessary to protect an important interest of the controller or of another natural person,” Meta’s defence can be bolstered by highlighting the EU courtroom’s precedent. “We look forward to engaging in further constructive discussions with the European Commission to bring this inquiry to a thorough conclusion.”
During today’s press briefing, senior fee officers were asked about this defense. The European Union clarified its stance on the issue, stating that any proposal to introduce a paid version of a service in lieu of monitoring ads must only do so “if necessary” and only charge an “acceptable fee”.
In the Digital Markets Act (DMA) framework, proponents of gatekeepers emphasize that these entities must justify the relevance of a pricing decision within the broader regulatory landscape. The EU has determined that Meta’s provision of an equal alternative to a fully consented service offering ads that do not rely on processing personal data, thereby ensuring contextual advertising.
Meta’s decision to withhold a free contextual ads option from users remains unclear, opting instead for a binary “pay or consent” approach that leaves many questioning the reasoning behind this choice.
The European Union appears poised to compel Meta to provide a non-binary, privacy-protected alternative in the near future.
“To ensure compliance with the Data Marketing Act, customers who refuse consent should still have access to a comparable service that utilizes significantly less of their personal data, specifically for personalized advertising purposes.”
Fees officers note that Meta may still offer a subscription option; however, they stress that any paid tier would need to be an additional offering (i.e., separate from the existing free service). There are a number of alternatives On top of unpaid data, there exists a type of surveillance that does not require customer consent to monitor their activity.
The European Union’s investigation into the matter has yet to conclude. Meta will have the opportunity to formally respond to our preliminary findings. Despite the urgency, the EU’s scrutiny timeframe is capped at 12 months, targeting a completion date of either March 2025 or earlier.
The BEUC, a prominent European consumer advocacy group, cautiously applauded the initial results, yet persisted in calling on the EU to swiftly implement the necessary measures for effective enforcement.
The European Fee has taken a significant step by launching an enforcement action against Meta’s controversial pay-or-consent model, following its failure to comply with the Digital Markets Act regulations. Following allegations regarding Meta’s model for breaches of consumer regulation and data security regulation,
According to Agustin Reyna, director general of BEUC, “It is imperative that Meta complies with existing legal guidelines designed to protect consumers.”
