Regulatory Setback for Meta as EU Challenges Ad-Free Subscription Tactics

Meta’s plan to introduce an ad-free subscription service in the European Union (EU) has encountered significant regulatory challenges.

The social media giant is alleged to have contravened EU competition regulations by forcing users to either tolerate advertisements or opt for a paid subscription to eliminate them.

Meta Plans to Implement Ad-Free Subscription Plans

This decision has sparked controversy concerning user autonomy and fair market practices in the digital advertising industry.

According to the European Commission, Meta’s “pay or consent” advertising model contravenes the Digital Markets Act (DMA). The commission’s initial assessment suggests that Meta's “binary choice” compels users to agree to the amalgamation of their personal data without providing an alternative that would ensure a less personalized yet equivalent experience of Meta’s social platforms.

European Commission Finds Meta in Violation of the DMA

Citing Article 5(2) of the DMA, the Commission underlined that gatekeeper companies like Meta should always obtain users’ consent before merging their personal data across “designated core platform services and other services.” Should users decline, the platform must offer them a less personalized, functionally equivalent alternative.

The European Commission believes gatekeeper companies leverage their position in digital markets to enforce service terms on their extensive user base. This lets them collect substantial amounts of personal data and gain potential competitive advantages over rivals who lack access to similar troves of information.

Meta Could Face Fines up to 10% of Its Global Turnover

The Commission’s preliminary findings indicate that Meta may be in violation of the DMA. While this notification doesn’t determine the investigation’s outcome, it allows Meta to defend its stance by reviewing the files and responding in writing.

If Meta is found non-compliant with Article 5(2) of the DMA, the Commission could impose fines up to 10% of Meta’s global turnover, increasing to 20% for repeated violations.

In case of systematic non-compliance, the Commission could also enforce remedies such as divestitures or acquisition bans.