Will Meta be compelled to rethink its approach to user privacy and advertising?

Meta’s “pay or consent” approach for Facebook and Instagram users in Europe is in violation of the Digital Markets Act (DMA), according to the European Commission’s preliminary assessment.

The implications for Meta’s business and the larger tech sector are significant as the EU continues to conducts its investigation.

The arguments

The Commission’s observations stated that, contrary to what the DMA mandates, Meta’s model does not provide users with a genuine choice. It claimed in a press statement that a paid alternative for avoiding tracking is inconsistent with the principles of fair user consent.

EU’s compliance expectations

The Commission pointed out that if Meta provides free services, then comparable non-tracking solutions must also be free. Paid alternatives must be extra options, not substitutes. According to Tech Crunch, Meta highlighted an EU court judgement to justify their strategy and expressed a willingness to engage in additional talks with the Commission to settle the matter.

Compliance and ethics

Meta’s method has raised ethical questions about user privacy and data security. The Commission believes that the defence’s citation of an EU court judgement does not completely meet the demand for a free, equal service without tracking.

Potential business model overhaul

There’s also the argument that should the DMA be strictly enforced, Meta might need to change its business model, which heavily relies on tracking user data for targeted advertising, fundamentally altering its monetization strategy. The EU suggested Meta could implement contextual ads that do not rely on personal data, offering a privacy-respecting choice and aligning with DMA requirements.

Industry-wide implications

The investigation’s outcome could set a precedent for other tech companies, influencing industry practices towards more privacy-conscious models and stricter compliance with user consent regulations. Experts opine that providing a free, non-tracking option could enhance consumer trust, align Meta’s practices with broader data protection standards, and mitigate regulatory scrutiny.

The facts

Meta’s pay or consent model compels users to either consent to data combination or pay for an ad-free experience, which the Commission claims does not deliver a less personalised but comparable version of its social networks.

Meta’s offer also allows consumers to choose between being followed for targeted adverts and paying around €13 per month for ad-free services.

According to a news release from the Commission, violations of the DMA might result in fines of up to 10% of Meta’s global annual turnover, with potential increases to 20% for subsequent offences. Furthermore, this verdict may force Meta to abandon its concept of charging users for access to its social networks through surveillance advertising.

The EU launched a formal DMA investigation in March, prompted by privacy and consumer advocacy groups who claim Meta’s subscription model also violates EU data protection and consumer protection regulations.

The DMA seeks to level the playing field by minimising the benefits that gatekeepers like Meta can gain. It compels gatekeepers to acquire user agreement before tracking them for advertising purposes.

The European Consumer Organisation, BEUC, welcomes the Commission’s preliminary findings and calls for immediate enforcement. The EU’s investigation is ongoing, with a goal of concluding by March 2025. Meta can formally respond to the findings.