Topline
Facebook and Instagram parent company Meta broke Europe’s strict digital competition rules by forcing users to “pay or consent” to share personal data, the European Commission said Monday. The breach could cost the company billions of dollars and comes just a week after the powerful regulator clamped down on iPhone giant Apple for stifling competition.
Mark Zuckerberg is CEO of Meta, which is accused by the European Commission of distorting digital competition … [+]
Key facts
The European Commission, the European Union’s executive arm and its technology and competition watchdog, said Meta’s so-called “pay or consent” advertising model violates the bloc’s Digital Markets Act, which is meant to encourage competition in the tech sector and protect smaller companies from big platforms.
Meta introduced the model in late 2023 in response to regulatory changes in the EU. This gave Facebook and Instagram users the option to pay nearly €13 (about $14) per month for ad-free versions or accept a free account that shows personalized ads.
The Commission said Meta’s “binary choice” violates DMA rules because it “forces users to consent to the combination of their personal data” and not a “less personalized but equivalent version” of the social networks the company offers.
According to the DMA, large technology platforms, also known as gatekeepers, must obtain consent before combining users’ personal data with core platform services and other offerings such as advertising, and must not make the service dependent on consent and instead provide an equivalent, less personalized alternative to offer. for those who refuse.
The Commission said its findings are preliminary and Meta can investigate the regulator’s investigation and defend itself in writing before a final decision is made on March 25, 2025.
“A subscription without ads follows the guidance of the highest court in Europe and complies with the DMA,” Meta said in a statement, adding that the company “looks forward to further constructive dialogue with the European Commission to conclude this investigation.”
Large number
$135 billion. That’s how much Meta reported in revenue last year. A fine under the DMA, which is up to 10% of global revenue for a first violation, could be as high as $13.5 billion.
Important background
The European Union is one of the most powerful trading blocs in the world, and in recent years the Commission has set its sights on large, mainly American, technology companies to level the playing field for smaller competitors. The DMA is the bloc’s flagship regime for ensuring this, and it can both force significant changes for companies wanting to operate in the EU and impose hefty fines on those who refuse to play along. Fines for violations can amount to 10% of annual global turnover, increasing to 20% for repeat violations. This could amount to tens of billions of dollars for some of Silicon Valley’s biggest players, although enforcement of the bloc’s landmark data protection rules, the GDPR, which can carry fines of 4%, suggests enforcement could be glassy and far less punitive than many had initially hoped. . The regulator’s warning to Meta comes a week after it attacked iPhone maker Apple over its App Store policies, which the bloc said illegally stifled competition.
Crucial quote
“Our investigation aims to ensure contestability in markets where gatekeepers like Meta have been harvesting personal data from millions of EU citizens for many years,” said EU antitrust chief Margrethe Vestager, the Commission’s Executive Vice-President. “We want to give citizens the opportunity to take control of their own data and opt for a less personalized advertising experience,” Vestager said, adding that the Commission’s “preliminary position is that Meta’s advertising model does not comply with the Digital Markets Act.”
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