Meta's "Pay or Consent" model: EU Commission sees violation of Digital Markets Act

The EU Commission has announced its preliminary finding that Meta's "pay or consent" model violates the Digital Markets Act.

On July 1, the EU Commission announced its preliminary finding that Meta's "pay or consent" model violates the Digital Markets Act (DMA). What criticism there is of the Meta model and what happens now that the Commission has made its decision.

Preliminary findings of the EU Commission

The EU Commission is certain: Meta's "pay or consent" model forces users to either subscribe to an ad-free version of Facebook and Instagram or consent to the use of their personal data for personalized advertising. According to the Commission, this practice violates the provisions of the DMA. This prescribes an equivalent, less personalized alternative.

Online platforms such as Meta often use personal data from both their own services and third-party providers to serve personalized advertising. This practice gives them a significant competitive advantage due to their market power and extensive user data. The DMA is intended to ensure that so-called "gatekeepers" who collect large amounts of personal data offer their services fairly.

According to Article 5(2) of the DMA, gatekeepers must obtain the consent of users to merge their data from different services. If a user refuses this consent, access to an equivalent, less personalized alternative must still be granted. Services or certain functionalities may not be made dependent on user consent.

The Commission's criticism of Meta's "pay or consent" model

In November 2023, Meta introduced the "pay or consent" model in the EU. Users can either take out a monthly subscription for an ad-free version of Facebook and Instagram or use the services for free with personalized advertising. The Commission considers this to be a violation of the DMA, as no equivalent, less personalized alternative is offered.

In particular, the Commission objects to the following aspects of the "pay or consent" model:

  1. Insufficient alternative: Users do not have the option of choosing a service that uses less personal data but is otherwise equivalent to the personalized service.
  2. Restriction of free consent: The model does not allow users to exercise their right to freely consent to the merging of their personal data.

A legally compliant service would have to offer users access to an equivalent service that uses less personal data, even if they do not give their consent to data processing.

Link tip: European Data Protection Board calls for real choice in consent

Next steps and possible consequences for Meta

With its preliminary findings, the Commission is giving Meta the opportunity to comment on the allegations. The US company can also inspect the investigation documents. Meta now has the opportunity to respond in writing to the Commission's findings. The investigation will be completed within the next twelve months. If the Commission's preliminary view is confirmed, a formal decision will be issued finding that the "pay or consent" model is in breach of Article 5(2) of the DMA.

In the event of an infringement, the Commission may impose fines of up to 10 % of Meta's total worldwide turnover. In case of repeated infringements, these sanctions may be increased up to 20 %. In addition, the Commission may impose further remedies: For example, the sale of parts of the company or the restriction of the purchase of additional services.

The Commission emphasizes its willingness to work constructively with Meta to ensure effective compliance. The aim of the investigation is to promote competitiveness in digital markets and ensure the protection of EU citizens' personal data. "The preliminary finding underlines the ambition to put users back in control of their data and provide them with a less personalized advertising experience," the EU Commission said in a statement.

The final decision and possible sanctions could have a significant impact on the business practices of gatekeeper platforms in the EU.

Link tip: European Commission press release on Meta's "pay or consent" model

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