EU charges Meta with breaching antitrust rules

The tech giant’s ‘pay or consent’ ad model violates the bloc’s new digital competition law, according to the European Commission

EU antitrust regulators have charged that Facebook parent company Meta’s new ad-supported social networking service fails to comply with the bloc’s landmark tech rules.

The social-media company’s recently introduced ‘pay or consent’ advertising model violates the EU’s Digital Markets Act (DMA) the European Commission (EC) stated on Monday. The tech firm’s policy gives users the option of either paying a subscription fee or allowing the company to use their data for targeted advertising.

“In the Commission’s preliminary view, this binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta’s social networks,” regulators said in a statement.

A Meta spokesperson told CNBC that its ad-supported subscription model “follows the direction of the highest court in Europe and complies with the DMA.”

“We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” the spokesperson said.

Meta rolled out the new model for Facebook and Instagram in Europe last November, following the EU’s ruling that it must get consent before showing ads to users and offer an “alternative” version of its service that does not rely on data collection for ads.

The US company has previously said it introduced the subscription offer in response to the EU ruling.

According to the EC however, Meta’s ad-supported model failed to comply with the DMA because it does not let users opt for a less personalized but equivalent experience.

“We want to empower citizens to be able to take control over their own data and choose a less personalized ads experience,” EU antitrust chief Margrethe Vestager said.

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The accusations against Meta are the latest in a slew of EC actions targeting Big Tech since the DMA came into force in March. The law aims to crackdown on anti-competitive practices by large digital companies and force them to open up their services to rivals.

Last week, the watchdog issued its first DMA charge against another US tech giant, claiming the Apple App Store breaches its rules by stopping app developers from pointing users to alternative options.

Under the DMA, companies may face fines of up to 10% of their global annual revenue if they fail to abide by the EU rules, or up to 20% in the event of repeated infringements.

In Meta’s case, such a penalty could be as high as $13.4 billion, based on the company’s 2023 annual earnings numbers, according to CNBC.