EU says Meta ad model violates Digital Markets Act

European Union regulators today said Facebook’s parent Meta violated its Digital Markets Act with its “pay or consent” ad model and may face massive fines. In this model, users must either pay to use Meta’s platforms ad-free or consent to their data being processed for personalized advertising. 

A statement released today said the model does not allow users to exercise their “right to freely consent” to the combination of their personal data. The EU said for Meta to be compliant, it must offer “equivalent services” for users who won’t give up their personal information to the company.

“This binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta’s social networks,” regulators wrote.

Meta pushed back on the ruling, saying it crafted its current model last year under the direction of the European courts so it could specifically comply with the DMA.

“Subscriptions as an alternative to advertising are a well-established business model across many industries, and we designed subscriptions for no ads to address several overlapping regulatory obligations, including the DMA. We will continue to engage constructively with the commission,” a Meta spokesman said.

The company said it looks forward to continuing dialogue with EU regulators about this.

If the violations stand, Meta could be fined the portion of the money it has made in Europe, which could be as much as $13.4 billion, according to its latest earnings report.

This is the second crack-down on a tech giant by the EU in the past seven days. Last Monday, regulators found Apple’s app store in violation of competitiveness laws.

Why we care. Meta has made its fortune with targeted advertising, something that is essentially illegal under the GDPR. Regulators have been voicing doubts about the company’s pay or consent model from the day it was introduced. It will interesting to see if Meta has a plan B ready.