Elon Musk's Twitter Blue is breaking European rules about unfair business practices by failing to show its full cost to consumers right away, EU agency says
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- Elon Musk's Twitter Blue subscription is a flagship project to make the company profitable.
- But the advertised subscription prices in the European Union don't factor in taxes.
- An EU consumer protection watchdog told Insider this breached pricing rules in the bloc.
Elon Musk's Twitter Blue subscription is breaking European Union rules about unfair business practices, a consumer watchdog in the bloc told Insider.
Specifically, the advertised subscription prices don't factor in taxes, which violates consumer-protection laws in the 27-country union, a spokesperson for the watchdog said.
Twitter Blue is one of Musk's flagship projects designed to make the social-media company profitable. It was rolled out to EU countries in February and March.
In EU countries that use the euro currency, Twitter Blue has an advertised monthly price of 8 euros, or about $8.50, for the web app — a little more than the $8 price in the US. The advertised annual price for most EU users is 84 euros, or about $88.50, versus $84 in the US.
However, the EU prices don't include value-added tax, a kind of sales tax which is different across Europe; for instance, it's 17% in Luxembourg and 25% in Sweden. While in the US sales tax is added to the advertised price at checkout, the EU requires companies to advertise the total price including the VAT.
That means Twitter users in Europe wouldn't know the subscription could actually cost an extra $20 a year until the Stripe checkout page automatically adds the tax after a second or two.
Insider tested the Twitter Blue subscription process in the UK and, through a VPN, in Belgium and Germany. At checkout, 20% VAT was added in each instance. VAT in the UK is 20%, in Belgium it's 21%, and in Germany it's 19%.
The website in Germany initially showed 84 euros for an annual subscription, but that rose by 20%, or 16.80 euros, to 100.80 euros, at checkout. The final price wasn't shown anywhere prior to checkout.
Subscriptions to digital services like Spotify, Netflix, and YouTube include the VAT in their advertised prices in Europe.
A spokesperson for the European Consumer Centre in Ireland — part of a network of offices that are designed to protect consumers and that are co-funded by the European Commission — said they reached out to legal staff in ECCs across the EU, and got responses from Belgium, Germany, Croatia, Ireland, and Malta, after being contacted by Insider.
"I can confirm that the pricing display and associated promotions are in breach of Articles 6 and 7 of the 'unfair business-to-consumer commercial practices' directive," they said.
The legislative provisions in question, which refer to misleading actions and misleading omissions, say that "a commercial practice shall be regarded as misleading if it contains false information and is therefore untruthful or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is factually correct."
The legislation says this includes "the price or the manner in which the price is calculated."
The ECC Ireland spokesperson said: "When advertising the pricing, Twitter should state the final VAT-inclusive price."
The ECC network functions to give advice to consumers across borders and does not have enforcement powers, which are held by individual nations' competition and pricing regulators.
In the UK, where Twitter Blue has been available since November, local laws require 20% VAT to be included in advertised prices.
People familiar with the workings of the UK's competition regulator, the Competition and Markets Authority, told Insider that companies not including the VAT in their advertised prices could be in breach of UK consumer-protection regulations.
When contacted about Twitter Blue, the authority said it doesn't comment on individual businesses.
Twitter didn't respond to requests for comment from Insider.