Meta’s ‘pay or consent’ model, which requires users to either allow the processing of their personal data or pay a monthly fee, has come under scrutiny by the European Commission. The Commission believes that this binary choice imposed by Meta does not comply with the Digital Market Act (DSA), a landmark law that aims to regulate Big Tech companies and promote fair competition in the digital space. Meta, the parent company of Facebook and Instagram, has been designated a “gatekeeper” under the DSA, subjecting it to stricter obligations. In response to this law, Meta introduced a new advertising system in November 2023 that presents users with the option to use the app for free but allow data processing, or pay a fee to use an ad-free version.
The European Commission’s preliminary findings, released recently, state that Meta’s binary choice model is not compliant with the DMA because it essentially forces users to consent to the combination of their personal data in order to access the app’s full features. According to the Commission, gatekeepers like Meta cannot make access to services or functionalities conditional on user consent. The Commission prefers an intermediate model where users who do not consent to data tracking can still enjoy a service without personalized ads. If the preliminary findings are confirmed, the Commission could issue a non-compliance decision that entails fines of up to 10% of Meta’s total global turnover. However, Meta has expressed willingness to make changes to align with DMA provisions and avoid such penalties.
Personal data is a valuable asset for digital companies like Meta, as it allows them to offer advertisers customized ways to reach potential consumers. Meta generates a significant portion of its revenue through advertising, highlighting the importance of personal data processing in its business model. The company has stated its commitment to complying with the DMA and has offered to reduce the cost of its subscription service in response to regulatory feedback. Meta’s spokesperson has expressed a desire for constructive dialogue with the European Commission to address concerns and bring the investigation to a resolution.
In response to the European Commission’s preliminary findings, Meta has taken steps to address the concerns raised regarding its ‘pay or consent’ model. The company’s willingness to adjust its business model to comply with the DMA provisions and avoid potential penalties indicates a commitment to working with regulators to ensure fair competition in the digital space. By offering a subscription service that allows users to access an ad-free version of the app while protecting their data privacy, Meta is demonstrating a willingness to adapt to regulatory requirements and engage in constructive dialogue with authorities.
Overall, the European Commission’s assessment of Meta’s ‘pay or consent’ model underscores the importance of data privacy and fair competition in the digital landscape. As companies like Meta continue to rely on personal data for advertising revenue, regulators are tasked with ensuring that user rights are protected and competition is maintained. By engaging in dialogue with regulatory authorities and offering solutions to address concerns, Meta is working towards aligning its business practices with regulatory requirements and promoting a more transparent and fair digital market. As the investigation progresses, Meta’s actions will be closely monitored to assess compliance with DMA provisions and adherence to EU competition rules.
