Meta’s ‘Pay or Consent’ model breaches digital rules: EU

The European Commission on Monday declared that Meta Platforms’ newly introduced ‘pay or consent’ advertising model fails to comply with the Digital Markets Act, compounding problems for the social media giant already under the scanner of regulators over privacy concerns.  

EC said that this “binary choice  forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta’s social networks”. 

What is the pay or consent model?

The pay or consent model was introduced by Meta in October last year with an aim to meet stricter EU data privacy regulations. 

Under the new model, a user could either pay a fee for an ad-free subscription and limit the amount of personal data collected by the website as compared to the free version, or he could continue to use the website for free and indirectly “consent” to his data being collected for targetted ads. 

What is the Digital Markets Act?

The DMA was introduced by the EU to make markets in the digital sector fairer and more contestable.

Under the law, it identifies “gatekeepers” or large digital platforms providing so-called core platfrom services, including search engines, messenger services and app stores, and intends to regulate their powers. 

Preliminary findings of the EU

The EC’s preliminary views were that Meta’s “pay or consent” advertising model is not compliant with the DMA as it does not meet the necessary requirements set out under Article 5(2). 

In particular, Meta’s model 

1) Does not allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the personalised ads based service. 

2) Does not allow users to exercise their right to freely consent to the combination of their personal data 

EC said that to ensure compliance with the DMA, users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalisation of advertising.

Margrethe Vestager, executive vice-president in charge of competition policy at the EC, said:

Our investigation aims to ensure contestability in markets where gatekeepers like Meta have been accumulating personal data of millions of EU citizens over many years. Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act. And we want to empower citizens to be able to take control over their own data and choose a less personalised ads experience.

What’s the way for Meta now?

Meta may reply to the investigation’s preliminary findings. The EC will conclude the probe by March next year. 

In case of non-compliance, the Commission can impose fines up to 10% of the gatekeeper’s total worldwide turnover. Such fines can go up to 20% in case of repeated infringement.

Moreover, in case of systematic non-compliance, the Commission is also empowered to adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.

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