Meta’s plan to offer EU users a way to opt out of ads, and associated data tracking, in compliance with evolving EU laws, could end up costing it a heap in penalties.
Today, the EU Commission has ruled that Meta’s ad-free subscription plan fails to comply with the Digital Markets Act (DMA), which aims to give European social media users more control over how their personal data is logged and used by social platforms.
Meta launched its ad-free subscription package in Europe in November last year, which enables EU users to opt out of ads and data tracking entirely, so long as they pay €9.99 per month. Conceptually, that would enable Meta to avoid financial penalty in complying with the new law, by replacing ad revenue loss with direct payments from users, while also providing the required option to avoid data tracking.
But privacy campaigners claim that Meta’s proposal actually undermines the focus of the GDPR, and its protections against “data capitalism”, and as such, the European Data Protection Board issued a call for an investigation into the offering, and its compliance with the new laws.
Which has now found that Meta is indeed in breach of the DMA. Which if upheld, could see the company fined up to 10% of its total worldwide turnover.
As per the EU Commission:
“The Commission takes the preliminary view that Meta's “pay or consent” advertising model is not compliant with the DMA as it does not meet the necessary requirements set out under Article 5(2). In particular, Meta's model does not allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the “personalised ads” based service and does not allow users to exercise their right to freely consent to the combination of their personal data.”
So at issue is the fact that Meta’s seeking to charge users to access its apps without data tracking, which the EU Commission says is against DMA regulations which stipulate that users should still be able to access the same experience without having to submit their personal data.
Which seems unlikely to hold up on legal challenge.
A key element here seems to be business loss, and impeding a company’s capacity to operate in order to comply with these new regulations. Meta’s ad-free subscription offering does allow people to use its apps without submitting their info, but Meta will likely argue that it shouldn’t be financially penalized for that option. Which, by removing more detailed ad targeting, it could argue that it is, as it can’t offer the same level of ad performance, which will see it lose ad partners.
The option, then, is for Meta to charge via a subscription model, which, it’s worth noting, won’t cover the amount it’ll likely lose per user from ads.
Indeed, Meta’s already offered a cheaper version of its ad-free subscription package to appease EU regulators, but now, the Commission is moving to force Meta into a situation that would see it lose income to comply with these rules.
I’m not sure that’s going to hold up to legal scrutiny, but then again, the EU Commission has already sided in favor of the challenge, which may not bode well for Meta’s case.
In any event, Meta’s ad-free subscription offering could soon be gone in EU, though I would suspect that Meta would, at the least, be able to avoid penalties by arguing that it was working in good faith to meet these requirements.
But it could be costly for Zuck and Co. We’ll see what happens next.
