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EU Commission says Meta’s ad-free subscription offer breaches DMA

EU Commission says Meta’s ad-free subscription offer breaches DMA

Meta’s plan to allow EU users to opt out of ads and associated data tracking, in line with changing EU law, could end up costing Meta a hefty fine.

Today, the European Commission decided to terminate Meta’s ad-free subscription plan does not meet the Digital Markets Act (DMA)which aims to provide European social media users more control over how their personal data is collected and used by social platforms.

Meta launches ad-free subscription package in Europe last November, allowing EU users to completely opt out of ads and data tracking as long as they pay €9.99 per month. Conceptually, that would allow Meta to avoid financial penalties for complying with the new law, by replacing lost ad revenue with direct payments from users, while also providing the requisite option to avoid data tracking.

But Privacy activists argue that Meta’s proposal effectively undermines the focus of the GDPRand its protection against “data capitalism”, and as such the European Data Protection Board has called for an investigation into the supply and its compliance with the new laws.

Who has now determined that Meta is indeed in breach of the DMA. If this is enforced, the company could be fined up to 10% of total global turnover.

According to the European 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 in Article 5(2). In particular, Meta’s model does not allow users to opt into a service that uses less of their personal data. but is otherwise equivalent to the “personalized advertising” based service and does not allow users to exercise their right to freely consent to the combination of their personal data.”

The point is that Meta wants to charge users to access its apps without any data being tracked. According to the European Commission, this is in breach of the DMA regulation, which states that users should still have access to the same experience without having to provide their personal data.

It seems unlikely that this will hold up in legal proceedings.

A key element here appears to be loss of business, and hampering a company’s ability to operate in order to comply with these new regulations. Meta’s ad-free subscription offering allows people to use its apps without submitting their data, but Meta will likely argue that it shouldn’t be penalized financially for that option. By removing more granular ad targeting, it could argue that it is, because it can’t provide the same level of ad performance, thereby losing advertising partners.

Meta then has the option to charge via a subscription model, but this does not cover the amount the company is likely to lose per user on advertising.

Meta already offered a cheaper version of its ad-free subscription to appease EU regulators. But now the Commission is going to force Meta to comply with these rules and lose revenue.

I’m not sure whether that will hold up under legal scrutiny, but on the other hand, the European Commission has already ruled in favor of the charges, which can’t be good news for Meta’s case.

In any case, Meta’s ad-free subscription offering could soon disappear in the EU, but I suspect Meta could at least avoid fines by arguing that it worked in good faith to comply with these requirements.

But it could prove costly for Zuck and Co. We’ll see what happens now.