Meta’s "Pay or Consent" Model Faces EU Scrutiny: A Battle for Data Privacy and Fair Competition
The European Commission has launched an investigation into Meta’s controversial "pay or consent" model for users of its social networks, Facebook and Instagram, finding that it potentially violates the Digital Markets Act (DMA). This comes after months of criticism from privacy advocates and consumer protection groups, who argue the model undermines user privacy and fails to offer a genuine alternative to data tracking.
The DMA, which entered into force in March 2023, aims to level the playing field for competition in the digital marketplace by targeting the advantages held by large online platforms, known as gatekeepers. Meta’s dominance in social networking has allowed it to collect vast amounts of user data for targeted advertising, giving it an unfair advantage over competitors.
The DMA’s central focus on data privacy requires gatekeepers to obtain explicit consent from users for combining their personal data across different services. This means that Meta, designated as a gatekeeper since September 2023, must ask users’ permission to track and profile their activity for personalized ads.
However, Meta’s “pay or consent” model has drawn intense scrutiny for failing to meet the DMA’s requirements. The Commission’s preliminary findings state that the binary choice Meta presents—consent to data tracking or pay for an ad-free experience—forces users to consent to the combination of their personal data and doesn’t offer a genuinely equivalent alternative for those who refuse tracking.
“Users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalization of advertising,” the Commission noted in a press release. This means that Meta’s equivalent service must be free, providing users a less personalized but equivalent version of their services without resorting to paid subscriptions.
The EU highlights that Meta could offer a non-personalized service using contextual advertising, a method that doesn’t rely on profiling user data. This alternative would guarantee data privacy while still generating revenue for Meta. The fact that Meta chose not to offer this option raises questions about its commitment to data protection and its willingness to relinquish its reliance on user data for advertising.
Meta, in response to the Commission’s findings, has defended its approach citing an earlier EU court judgement that allows for a paid alternative to data tracking “if necessary”. However, the Commission argues that Meta must demonstrate the necessity of a fee, and that it could offer a free, non-personalized alternative.
The European Consumer Organisation (BEUC) has welcomed the Commission’s investigation and its preliminary findings. “It’s good news that the Commission is taking enforcement action based on the Digital Markets Act against Meta’s pay-or-consent model,” stated BEUC’s Director General, Agustin Reyna. “We now urge Meta to comply with laws meant to protect consumers.”
The EU’s investigation is not yet complete, and Meta will have the opportunity to respond formally to the preliminary findings. However, the Commission has set a 12-month timeline to complete the probe, indicating that a resolution is expected by or before March 2025.
The outcome of this investigation has significant implications for data privacy and online competition. If Meta is found to be in violation of the DMA, it could face penalties of up to 10% of its global annual turnover, sending a strong signal to other gatekeepers that compliance with the Act is non-negotiable.
The Commission’s stance on Meta’s “pay or consent” model reflects a growing global trend towards greater data privacy and regulation of large tech companies. By pushing back against Meta’s data driven advertising model, the EU is sending a clear message that user consent and fair competition are paramount in the digital age. The next steps in this investigation will reveal the future of privacy-safe alternatives on social media platforms, and ultimately how these platforms will adapt to a data-conscious landscape.
