Meta accused of breaching EU rules with new ad model

1st Jul 2024 12:30

(Sharecast News) - Facebook's parent company, Meta, was facing allegations from European Union regulators of breaching the bloc's strict competition rules on Monday, through its ad-supported subscription service introduced for Facebook and Instagram in Europe last year.

The European Commission described Meta's model as "pay or consent", explaining that users needed to either pay for an ad-free experience or consent to their data being used for personalised advertising.

According to CNBC, It was introduced following a European Court of Justice ruling allowing companies to offer an alternative service without relying on data collection for ads.

The EC said it preliminarily found that Meta's approach forced users to consent to data processing without providing a less personalised, but equivalent, service.

Regulators emphasised that the company needed to give users access to a similar service using less personal data for ad personalisation.

Additionally, the EU claimed Meta's service failed to respect users' rights to "freely consent" to the use of their personal data for targeted ads.

The accusations fell under the EU's Digital Markets Act (DMA), enforceable since March, which aims to curb anti-competitive practices by tech giants and ensure they open some services to competitors.

Companies found in violation of the DMA could face substantial fines, up to 10% of their global annual revenue, with the potential for that figure to double for repeated breaches.

CNBC said that for Meta, that could mean a fine of up to $13.4bn based on 2023 earnings.

Meta now has an opportunity to respond to the Commission's preliminary findings in writing.

A spokesperson for Meta told CNBC that the ad-supported subscription model aligned with the European Court of Justice's direction and the DMA.

The company also expressed a desire for constructive dialogue with the European Commission to resolve the investigation.

At 0852 EDT (1352 BST), shares in Meta Platforms were up 0.54% in premarket trading on the Nasdaq, at $507.05.

Reporting by Josh White for Sharecast.com.