Meta, the parent company of Facebook and Instagram, is facing trouble as the European Commission (EU) has notified them that their personalized advertising model, known as the “pay or consent” model, violates the Digital Markets Act (DMA). The EU’s investigation aims to ensure competition in markets where companies like Meta have been collecting personal data from millions of EU citizens for years.
The EU’s preliminary view is that Meta’s advertising model fails to comply with the DMA. The EU wants to empower citizens to have control over their own data and choose a less personalized ads experience. The ball is now in Meta’s court, and they have the opportunity to defend themselves and respond to the findings as the investigation continues.
The DMA investigation must be concluded within 12 months from March 25, 2024. If the investigation finds that Meta was in non-compliance with the DMA, Facebook and Instagram’s parent company could face a hefty fine of 10 percent of its total worldwide turnover.
The “pay or consent” model implemented by Meta on Facebook and Instagram is at the heart of this investigation. According to the DMA, gatekeeper companies must obtain explicit consent from users in the EU before sharing their data between different platforms. Simply entering account details on one platform does not grant consent for the secondary use of that data on another platform.
Meta argues that their paid subscription offering on Facebook and Instagram provides an ad-free experience and implies consent for data usage. However, the EU’s preliminary findings state that Meta’s model does not comply with the DMA. The EU emphasizes that gatekeepers cannot make access to services or functionalities conditional on users’ consent.
If the final investigation rules against Meta, they will have to comply with the DMA or face further fines. Repeated infringement can lead to fines of up to 20 percent of total global turnover. Additionally, “systemic non-compliance” can result in actions such as banning the company from acquisitions or requiring the sale of all or part of its business.
This investigation into Meta’s advertising model is part of a broader effort by the EU to regulate big tech companies and ensure fair competition. The DMA aims to open up platforms to third parties, fostering competition and protecting user rights.
It remains to be seen how Meta will respond to the EU’s findings. The outcome of this investigation will have significant implications for the future of personalized advertising and user data protection in the EU.
