When Meta introduced a subscription option last year that would allow users in the European Union to pay for an ad-free experience on instagram and facebook, it was aiming to address regulatory issues the company was facing in the region.
The plan, however, created new legal headaches.
On Monday, European Union regulators said Meta's subscription, which costs up to 12.99 euros a month, amounted to a “pay or consent” scheme which required users to choose between paying a fee or handing over more personal data to Meta for use in targeted advertising.
Meta introduced subscriptions last year as a way to address regulatory and legal scrutiny of its advertising-based business model. Of greater concern was the combination of data collected by the company about users across its different platforms (including facebook, instagram and WhatsApp) with information scraped from other websites and apps.
Meta argued that by offering a subscription, users had a fair alternative.
But regulators said Monday that the system was not a choice at all, and that it forced users to pay for privacy. Authorities said Meta’s policy violated the Digital Markets Act, a new law aimed at limiting the power of the biggest tech companies.
The law, known as the DMA, is intended to prevent big tech companies from using their size to force users to agree to terms of service they would otherwise reject, including the collection of personal data. The concern was that platforms like instagram and facebook are so widely used that people have to choose between handing over their data or not joining at all.
Regulators said the law requires companies to allow users to opt out of having their personal data collected while still obtaining a “less personalized but equivalent alternative” to the service.
“Meta’s pay-or-consent business model violates the DMA,” said Thierry Breton, the European Commissioner who helped draft the law. “The DMA exists to give users back the power to decide how their data is used and to ensure that innovative companies can compete on a level playing field with tech giants on access to data.”
In a statement, Meta said the subscription service was in compliance with the Digital Markets Act and would work with European regulators to resolve the investigation.
Last week, Nick Clegg, chairman of Meta, said that Europe was Falling behind economically “Europe’s regulatory complexity and the patchwork of laws across member states often make companies hesitant to launch new products here,” he said.
Monday's announcement is another step in a longer process. The European Commission, the executive arm of the 27-nation bloc, has until March to complete its investigation. If found guilty, Meta could face fines of up to 10 percent of its global revenue and up to 20 percent for repeat offences.
Meta is the second company to face charges under the Digital Markets Act. Last week, the commission filed charges against Apple for unfair business practices related to the App Store.
