Meta was accused on Monday of violating Europe’s sweeping technology competition law by forcing a restrictive “pay or consent” model on customers for advertising on Instagram and Facebook, intensifying a long-running dispute over user privacy.
Billionaire Mark Zuckerberg’s company drew the ire of regulators last year when it launched a subscription service that gave users the option to pay the equivalent of $14 a month for an ad-free experience on the app or agree to Meta using their personal data for targeted advertising.
If Meta is found to have violated the law, the company could be fined up to 10% of its total global revenue, which could amount to nearly $13.5 billion given the company’s 2023 global revenue of $134.9 billion.
Mehta could face billions of dollars in fines if the charges are upheld. AFP via Getty Images
The accusations are the latest in a long-running regulatory dispute surrounding Meta, which has been accused of failing to comply with the European Union’s strict data privacy law known as the General Data Protection Regulation (GDPR).
Last year, the EU slapped Meta with a record $1.3 billion fine for improperly transferring European users’ data to the US.
The European Union’s competition watchdog said Meta’s advertising model violated the Digital Markets Act, which came into force in March and established new rules regulating the behaviour of technology companies considered “gatekeepers” of the internet.
“In the Commission’s preliminary view, this choice forces users to consent to the integration of their personal data and fails to offer them a comparable, but less personalized, version of the Meta social network,” the Commission said in a statement.
EU officials said Meta should offer users who don’t consent to tracking or pay a fee a third option: a free version of the app that doesn’t use their personal data to display ads.
Meta derives the majority of its annual revenue from digital advertising: In the first quarter of 2024 alone, the social media giant is set to make more than $35 billion in ad sales, with roughly a quarter of that coming from Europe.
Pictured: EU Competition Commissioner Margrethe Vestager. AFP via Getty Images
“We want citizens to be able to control their data and choose less personal advertising experiences,” EU competition chief Margrethe Vestager said in a statement.
A company spokesperson said Meta’s subscription plans comply with a recent ruling by the European Supreme Court.
“Our ad-free subscriptions comply with the DMA as instructed by the European Supreme Court. We look forward to further constructive dialogue with the European Commission to bring this investigation to an end,” a Meta spokesperson said in a statement.
Mehta has been informed of the allegations and will be given an opportunity to defend its business practices, the committee said. The investigation is expected to be completed by March 2025.
EU authorities said the company had violated certain provisions of the Digital Markets Act by not allowing users to “opt into services that use less personal data but are otherwise equivalent to ‘personalised advertising’ based services”.
Meta’s digital advertising model also “does not allow users to exercise their right to freely consent to the combination of their personal data.”
Meta is the second company to be indicted for violating the Digital Markets Act. AP
Meta is the second company to face formal charges under Europe’s Digital Markets Act.
Last week, EU authorities filed preliminary charges against Apple for preventing app developers from easily directing customers to cheaper products outside the App Store.
Like Meta, Apple could face billions of dollars in fines if the charges against it are upheld.
In a separate lawsuit, Europe accused Microsoft of potentially violating the law by bundling its Teams software with office productivity apps such as Office 365 and Microsoft 365.
With post wire
