Meta Accused of Breaching US Antitrust Rules due to Ad-Supported Subscription Service

On Monday, EU regulators accused parent company of Facebook of not complying with the landmark antitrust rules of the bloc. This was after Meta recently introduced its ad-supported subscription service.  

According to the Commission, the new subscription service is a ‘pay or consent’ model.

Here is the sentence rewritten in active voice:

The Meta platform requires users to either pay to remove ads or consent to the use of their data for personalized advertising.

The accusation

Subscriptions for both Instagram and Facebook launched in Europe last year. The regulators issued a statement on Monday regarding the service.

They said that the executive body of the EU i.e. the European Commission believes the new service forces users to give consent for their data to be used.

Otherwise, they would be given access to a less personalized version of Meta’s social platforms. A spokesperson for Meta said that their ad-subscription model was in compliance with the DMA.

The spokesperson said that it was in accordance with the direction laid out by Europe’s highest court. They added that they wanted to have a constructive dialogue with the Commission to end the probe.

The service

Last year, Meta had launched the new model after EU’s top court. The European Court of Justice, had issued a ruling.

It had said that the company could launch an ‘alternative’ version of the subscription service that does not collect data for ads.

According to Meta, this ruling had prompted it to introducing this subscription offer. On Monday, the Commission said that the ad-supported offering did not comply with the DMA for two reasons.

First off, the model does not give users the option of a service, which is the same as the ad-based service, but uses less personal data.

The regulators asserted that the ad-based as well as ad-free services should be equal. The lack of consent was the other reason that the EU highlighted.

It said that users do not have the right to give free consent for the use of their personal data for ad targeting.

Hefty fines

The Digital Markets Act had gone into effect back in March in the European Union. The purpose of the DMA is to address anti-competitive practices of big digital firms.

It also aims to force these companies in opening up their services to competitors. Violations of the DMA can result in massive fines that can go as high as 10% of their annual global revenue.

If the Commission finds Meta to be in breach of the DMA, it may have to pay a penalty of a massive $13.4 billion.

This figure is based on the earning numbers of the company in 2023. After the preliminary findings of the EU, Meta can submit its own defense in writing.

The Commission launched the investigation into Meta in March, along with probes into other tech companies including Alphabet and Apple Inc.

This is to be completed within 12 months from the commencement of the initial proceedings.