EU Commission Rules Meta’s Ad-Free Subscription Violates DMA

    EU Commission Rules Meta’s Ad-Free Subscription Violates DMA

    Meta’s plan to offer EU users an ad-free experience and avoid data tracking, in compliance with new EU regulations, may lead to significant penalties.

    Today, the EU Commission ruled that Meta’s ad-free subscription model does not comply with the Digital Markets Act (DMA), which aims to give European social media users more control over their personal data usage.

    Last November, Meta introduced an ad-free subscription in Europe, allowing users to avoid ads and data tracking for €9.99 per month. This was intended to comply with the new law by substituting ad revenue loss with user payments while offering a way to avoid data tracking.

    However, privacy advocates argue that Meta’s plan undermines the General Data Protection Regulation (GDPR) and its protections against “data capitalism.” As a result, the European Data Protection Board called for an investigation into the compliance of this offering with the new laws.

    The investigation concluded that Meta’s plan violates the DMA. If upheld, Meta could face fines up to 10% of its total global revenue.

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    According to 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.”

    The issue is that Meta’s charge for an ad-free experience contradicts DMA regulations, which require users to access the same service without needing to submit their personal data.

    This legal challenge seems unlikely to favor Meta. A key concern is whether the new regulations impede Meta’s business operations. Meta’s ad-free subscription does allow app usage without data submission, but Meta may argue that it shouldn’t be financially penalized for this option. The argument would be that by removing detailed ad targeting, Meta loses ad partners due to reduced ad performance.

    The alternative for Meta is to use a subscription model, which likely won’t compensate for the ad revenue loss per user.

    Meta has already offered a cheaper version of its ad-free subscription to appease EU regulators. However, the Commission aims to enforce compliance that could result in financial losses for Meta.

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    The legal outcome is uncertain, but the EU Commission’s initial ruling does not favor Meta. The ad-free subscription might soon be unavailable in the EU, though Meta might avoid penalties by demonstrating good faith efforts to meet regulatory requirements.

    Regardless, this situation could prove costly for Meta. We’ll see what unfolds next.

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