The European Commission’s investigation spells bad news for Facebook and Instagram.
The EU has notified Meta, the parent company of Facebook and Instagram, that its “pay or consent” personalized advertising model violates the Digital Markets Act (DMA).
“Our investigation is aimed at ensuring contestability in a market where gatekeepers like Meta have accumulated the personal data of millions of EU citizens for years,” European Commissioner Margrethe Vestager said in a statement on Monday. “Our preliminary view is that Meta’s advertising model does not comply with the Digital Markets Act, and we want citizens to be able to control their data and choose a less personalized advertising experience.”
The EU has now held Meta accountable. The social media giant has the right to defend itself and respond to the EU’s findings as the investigation continues. According to law, the EU must conclude the DMA investigation within 12 months of its launch date, March 25, 2024.
If the investigation finds that Meta violated the DMA, the European Commission could impose huge fines on Facebook and Instagram’s parent company of up to 10% of their global turnover.
Meta’s “pay or accept” model
March, Mashable report An EU investigation into big tech companies to see if they comply with the newly enacted DMA, which essentially forces “gatekeeper” companies to open up their platforms to third parties in order to promote competition.
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One of the investigations was against Meta regarding the “pay or consent” model implemented by Facebook and Instagram.
Gatekeeper companies must obtain consent from EU users to share user data between their core platforms. This means that if Meta wants to share a Facebook or Instagram user’s account data to serve personalized ads, it needs to get their explicit permission. Simply entering account details into a social media platform does not give consent for that user’s data to be used on other platforms.
However, Meta has operated under the belief that its “pay or consent” model complies with DMA regulations. Essentially, Meta claims to offer paid subscriptions to Facebook and Instagram users that provide an ad-free experience. According to Meta, if users do not subscribe to the paid service, they consent to their data being used for advertising purposes.
The Commission’s preliminary findings determined that Meta’s “pay or agree” model does not comply with the DMA.
“Under Article 5(2) of the DMA, gatekeepers must seek users’ consent when combining personal data between designated core platform services and other services, and if users decline such consent, they must have access to a less personalized but comparable alternative,” the EU statement said. “Gatekeepers cannot make the availability of their services or specific features conditional on users’ consent.”
Specifically, the EU is saying that Facebook and Instagram cannot serve personalized ads to users unless they get consent from them, even if those users are not paying subscribers to the platforms.
It will be interesting to see Meta’s reaction to the EU’s findings. If the final investigation finds against the company, it faces further fines for not complying with the DMA. For repeated violations, the fines could reach up to 20% of total global turnover. According to the European Commission, “systematic non-compliance” could lead to further measures, such as a ban on acquiring gatekeeper companies or a requirement to divest all or part of the business.
