On Monday (July 1), EU regulatory agency accused Meta Platforms, a social media company, of violating the group's new digital competition rules, as it forced Facebook and Instagram users to choose between watching ads or paying to avoid them. #AI trend# # 2024 macro outlook#
Meta has been offering a paid version of Facebook and Instagram to European users since November of last year as a way to comply with strict data privacy rules in Europe.
Users can pay at least 10 euros (approximately $10.75) per month to avoid ad targeting based on their personal data. After the highest court in the EU ruled that Meta must first obtain user consent, the US tech giant launched this option, which threatened its business model of customizing ads based on individual user online interests and activities. The European Commission, the EU's executive body, says its preliminary investigation shows Meta's "pay or agree" ad model violates digital market laws in all 27 EU member states.
The commission said that Meta's model does not allow users to exercise their "freedom to consent" and agree to have their personal data combined for personalized online ad targeting for a variety of its services (including Facebook, Instagram, Marketplace, WhatsApp and Messenger).
The commission also noted that Meta's model does not provide users with an option for a service that is equivalent to, although less personalized than, its social networking service.
Shortly after the legislation (also known as DMA) came into effect in March of this year, the commission began investigating. This is a broad set of regulations designed to prevent tech "gatekeepers" from dominating the digital market under the threat of hefty fines.
DMA aims to limit large tech companies' ability to collect large amounts of personal data from their users, thereby giving them an advantage in online advertising or social media services competition. The commission said it hopes to see an option that does not rely on users sharing their full personal information for advertising purposes to make Meta compliant with the law.
Thierry Breton, the European Commissioner responsible for EU digital policy, said in a statement: "DMA aims to allow users to decide how their data is used and ensure that innovative companies compete equally with tech giants in data access."
Meta now has the opportunity to respond to the commission's allegations, and the commission must end its investigation by March 2025. The company could face fines of up to 10% of its annual global revenue, which could amount to several billion euros.
"An ad-free subscription complies with the direction of the European Court of Justice and complies with DMA," Meta said in a statement. "We look forward to having further constructive discussions with the European Commission to end this investigation."
According to the Digital Markets Act, Meta is one of the seven online gatekeepers, and Facebook, Instagram, WhatsApp, Messenger, and its online advertising business are among the more than 20 "core platform services" that require the highest level of scrutiny.
Monday's decision is the latest in a series of regulatory activities by Europe against large tech companies. A week ago, the EU launched its first accusations against Apple under DMA, accusing it of preventing app developers from pointing to cheaper options outside its App Store. It has also recently accused Microsoft of violating EU antitrust laws by bundling Teams messaging and video conferencing apps with widely used Office business software.
FX168 Financial News Agency (North America) - EU regulatory agency accused social media company Meta Platforms on Monday (July 1) of violating the group's new digital competition rules, as it forced Facebook and Instagram users to choose between watching ads or paying to avoid them.