Brussels (Brussels Morning) – The European Commission has found and informed Meta that its ‘pay or consent” advertising model is not in compliance with the Digital Markets Act.
How does Meta’s ‘pay or consent’ model fail DMA?
The European Commission has notified Meta of its preliminary conclusions that its “pay or consent” advertising model does not appear to concede with the Digital Markets Act (DMA). In the EU Commission’s preliminary view, this binary choice forces users to agree to combine their data and fails to deliver a less personalised but equivalent understanding of Meta’s social networks.
Does Meta’s advertising model comply with EU regulations?
Online platforms often gather personal data across their own and third-party services to deliver online advertising services. Due to their important position in digital markets, gatekeepers have been capable of imposing terms of services on their extensive user base permitting them to collect extensive amounts of personal data. This has given them possible advantages compared to competitors who need access to such an extended amount of data, thereby increasing high barriers to online advertising and social network services.
Under Article 5(2) of the DMA, gatekeepers must pursue users’ consent for merging their data between designated core platform services and other services, and if a user rejects such support, they should have access to a small personalised but equivalent option. Gatekeepers cannot make use of the service or specific functionalities dependent on users’ consent.
In reaction to regulatory differences in the EU, Meta presented in November 2023 a binary “pay or consent” offer whereby EU users of Facebook and Instagram have to decide between (i) the subscription for a monthly fee to an ads-free version of these social networks or (ii) the free-of-charge access to a version of these social networks with personalised ads.
What are the EU’s concerns about Meta’s ad practices?
The EU Commission takes the initial view that Meta’s “pay or consent” advertising standard is not compliant with the DMA as it does not fulfil the requirements set out under Article 5(2). In particular, Meta’s model Does not permit users to opt for a service that employs less of their data but is otherwise identical to the “personalised ads” based service and Does not allow users to exert their right to freely consent to the combination of their data.
In the next steps, by sending preliminary findings, the EU Commission reports Meta of its preliminary view that the business is in breach of the DMA. This is without bias to the outcome of the investigation. Meta now can exert its rights of defence by examining the records in the Commission’s investigation file and responding in writing to the Commission’s preliminary findings. The Commission will complete its investigation within 12 months from the beginning of proceedings on 25 March 2024.
Will Meta’s ad practices face penalties under DMA?
If the Commission’s preliminary views were to be finally confirmed, the Commission would assume a decision conclusion that Meta’s model does not comply with Article 5(2) of the DMA.
In case of non-obedience, the EU Commission can levy fines of up to 10% of the gatekeeper’s total worldwide turnover. Such penalties can go up to 20% in case of repeated violations. Moreover, in case of frequent non-compliance, the Commission is also authorised to adopt additional remedies such as obliging a gatekeeper to market a business or parts of it or denying the gatekeeper from acquisitions of additional services connected to systemic non-compliance.
