Meta accused of breaching EU antitrust rules over ‘pay or consent’ model (NASDAQ:META)

Update: Confirms breach of EU rules; adds EC statement

Facebook’s parent Meta (NASDAQ:META) on Monday was accused by EU regulators of breaching the bloc’s landmark digital rules.

In March, the European Commission launched a non-compliance probe against Apple (AAPL), Alphabet’s (GOOGL) (GOOG) Google and Meta Platforms (META) for potential violations under the Digital Markets Act (DMA).

In Meta’s (META) case, the non-compliance investigations were related to the social network’s “pay or consent model.”

The commission today informed Meta (META) of its preliminary findings that its “pay or consent” advertising model fails to comply with the Digital Markets Act (DMA).

Meta (META) introduced a no-ads subscription service for Facebook and Instagram in Europe late last year to comply with the evolving European regulations, enabling users to opt out of the company’s data tracking for advertising purposes. Meanwhile, users who consent to be tracked get a free service.

“In the Commission’s preliminary view, this binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta’s social networks,” an official statement read.

Meta (META) now has the possibility to exercise its rights of defense by examining the documents in the commission’s investigation file and replying in writing to the commission’s preliminary findings.

The commission will conclude its investigation within 12 months from the opening of proceedings, which were on March 25, 2024.

If found in breach of the act, the company faces hefty penalties of up to 10% of its global turnover, and up to 20% for any repeat offense.

“Our investigation aims to ensure contestability in markets where gatekeepers like Meta have been accumulating personal data of millions of EU citizens over many years. Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act. And we want to empower citizens to be able to take control over their own data and choose a less personalized ads experience,” Margrethe Vestager, executive vice-president in charge of competition policy said.

The report comes after EU antitrust regulators last week pressed a similar case against Apple (AAPL). The European Commission said that Apple’s App Store rules breach the DMA as they prevent app developers from steering consumers to alternative channels for offers and content.