Meta is in breach of European digital market rules" is the Commission's main conclusion regarding the technology company's 'pay or consent' advertising model. This model forces users to consent to the combination of their data and does not offer a less personalized but equivalent version of the Meta environment.
To set the context: The problem between Meta and the EU arises from the fact that online platforms typically collect personal data about their own services and third parties in order to provide online advertising services. As a result, Meta's gatekeepers have been able to impose terms of use on their extensive user base that allow them to collect large amounts of personal data. This gives them an advantage over competitors who cannot access the same amount of data.
According to Article 5, paragraph 2 of the Digital Markets Act, gatekeepers must obtain users' consent to combine their data via certain central platform services and other services. If a user refuses this consent, they must have access to a less personalized but equivalent alternative. Gatekeepers may not make the service or certain functions dependent on the user's consent.
For Margrethe Vestager, the EU Commissioner responsible for competition policy and Vice-President of the Commission, "our investigation aims to ensure contestability in markets where gatekeepers like Meta have collected personal data from millions of EU citizens over many years."
The Meta case
In response to regulatory changes in the EU, Meta introduced a binary 'pay or consent' offer in November 2023. This requires Facebook and Instagram users in the EU to choose whether they want to subscribe to an ad-free version for a monthly fee or access a free version with personalized advertising.
Brussels takes the preliminary view that Zuckerberg's model does not comply with the regulation as it does not give users the option to choose a service that uses less personal data but is otherwise equivalent to the service based on "personalized ads" and does not allow users to freely exercise their right to consent to the combination of their data.
"We want to empower citizens to take control of their data and opt in to less personalized advertising," says Vestager.
To ensure compliance with the Digital Markets Act, users who do not give their consent must be able to access an equivalent service that uses less personal data to personalize advertising.
The Commission has coordinated with the relevant data protection authorities throughout the investigation.
For Thierry Breton, Commissioner for the Internal Market, "the Digital Markets Act aims to give power back to users to decide how their data is used and to ensure that innovative companies can compete on an equal footing with tech giants in terms of access to data."
Next steps
By sending these preliminary conclusions, the Commission is informing Meta that it is in breach of the Digital Markets Act. Meta now has the opportunity to exercise its right of defense by reviewing the Commission's investigation documents and responding in writing.
If the Commission confirms its conclusions, it may impose fines of up to 10% of the gatekeeper's worldwide turnover. In the case of repeated infringements, these fines can be up to 20%.
In the case of systemic infringements, the Commission also has the power to take remedial action, such as requiring a gatekeeper to sell a business or parts thereof or prohibiting the gatekeeper from acquiring additional services related to a systemic infringement.
The Commission is continuing its dialog with Meta to "find a satisfactory way to achieve effective compliance." It will conclude its investigation within twelve months of the initiation of proceedings on March 25, 2024.