Top line
Facebook and Instagram, the parent company of Meta, broke Europe’s tough digital competition rules by forcing users to “pay or agree” to share personal data, the European Commission said Monday, a breach that could potentially cost the company billions of dollars — just a week after the powerful regulator targeted iPhone giant Apple for suppressing competition.
Mark Zuckerberg is the CEO of Meta, which the European Commission has accused of distorting digital competition … [+]
Key facts
The European Commission, the European Union’s executive arm as well as its tech and competition watchdog, said Meta’s so-called “pay or agree” advertising model contravened the bloc’s Digital Markets Act, which is meant to promote competition in technology. and protect smaller companies from large platforms.
Meta introduced this model in late 2023 in response to regulatory changes in the EU, giving Facebook and Instagram users the option to pay nearly €13 (around $14) per month for ad-free versions or accept a free account with personalized ads.
The commission said Meta’s “binary choice” violates DMA rules because it “forces users to agree to the combination of their personal data” and does not offer a “less personalized but equivalent version” of the company’s social networks.
According to the DMA, large technology platforms, called gatekeepers, must seek consent before combining users’ personal data with core platform services and other offerings such as advertisements, and should not condition use of the service on consent and instead offer an equivalent, less personalized alternative. for those who refuse.
The commission said its findings are preliminary and Meta has until March 25, 2025 to review the regulator’s investigation and defend itself in writing before issuing a final decision.
“The ad-free subscription follows the guidelines of the highest court in Europe and is in line with the DMA,” Meta said in a statement, adding that the company “looks forward to further constructive dialogue with the European Commission to bring this investigation to a close.”
A big number
135 billion dollars. That’s how much Meta reported in sales last year. The fine under the DMA, which caps first-time violations at 10% of global revenue, could reach up to $13.5 billion.
Key background
The European Union is one of the most powerful trading blocs in the world, and in recent years the Commission has targeted large, mostly American, technology companies to level the playing field for smaller competitors. The DMA is the bloc’s flagship regime that delivers this and could force significant change for companies looking to operate in the EU and impose heavy fines on those who refuse to play ball. Fines for infringements can reach up to 10% of annual global turnover, and up to 20% for repeated offences. That can run into the tens of billions of dollars for some of Silicon Valley’s biggest players, although enforcement of the main block data protection rules, GDPR, which can be fined 4%, suggests that enforcement may be icy and far less punitive than many initially hoped. . The regulator’s warning to Meta comes a week after it targeted iPhone maker Apple for its App Store policies, which the bloc said illegally stifled competition.
Essential quote
“Our investigation aims to ensure competitiveness in markets where gatekeepers like Meta have been collecting the personal data of millions of EU citizens for many years,” said EU antitrust chief Margrethe Vestager, executive vice-president of the Commission. “We want to empower citizens to take control of their own data and choose less personalized advertising,” Vestager said, adding that “the Commission’s preliminary view is that Meta’s advertising model is not compliant with the Digital Markets Act.”
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