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Digital

EU says Meta's “Pay or Consent” model violates Digital Markets Act

In case of non-compliance, the Commission can impose fines up to 10% of the gatekeeper's total worldwide turnover.

The European Commission has informed Meta of its preliminary findings that its “pay or consent” advertising model fails to comply with the Digital Markets Act (DMA). In the Commission's preliminary view, this 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.

As mentioned in the release, "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. Gatekeepers cannot make use of the service or certain functionalities conditional on users' consent."

By sending preliminary findings, the Commission informs Meta of its preliminary view that the company is in breach of the DMA. This is without prejudice to the outcome of the investigation. Meta now has the possibility to exercise its rights of defence by examining the documents in the Commission's investigation file and replying in writing to the Commission's preliminary findings. The Commission will conclude its investigation within 12 months from the opening of proceedings on 25 March 2024.

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. It 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.

Margrethe Vestager, 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."

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: (i) the subscription for a monthly fee to an ads-free version of these social networks or (ii) the free-of-charge access to a version of these social networks with personalised ads.

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% of the gatekeeper's total worldwide turnover. Such fines can go up to 20% 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.

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