The European Commission has accused Facebook's parent company, Meta, of breaching new European rules under the Digital Markets Act over its pay-or-opt-out advertising model.
Points of attention
- The European Commission has accused Meta of violating the Digital Markets Act due to its pay-or-take-it advertising model.
- Meta could face significant fines that could reach billions of euros if found guilty.
- EU regulators are making efforts to ensure free choice of users in matters of advertising and processing of personal data.
- Meta becomes the second company to suffer the consequences of a violation of the EU Digital Markets Act, after Apple.
- In addition to Meta, investigations are also underway against Alphabet (Google), Amazon, ByteDance (TikTok) and Microsoft in connection with possible violations of the law.
Meta may pay billions in fines
In late 2023, Meta launched an ad-free subscription service that allows European Facebook and Instagram users to pay up to €12.99 per month for ad-free versions. Alternatives are versions with personalized advertising.
On July 1, the European Commission said that, in its preliminary view, "this binary choice forces users to consent to (the use of) their personal data and does not provide them with a less personalized but equivalent version of Meta social networks."
The commission believes that the proposed Meta model:
It does not allow users to choose a service that uses less of their data but is otherwise equivalent to a "personalized advertising" based service.
It does not allow users to exercise their right to consent to the combination of their data freely.
Meta now has the opportunity to exercise its right of defense by examining the documents in the Commission's file and submitting a written response to the Commission's preliminary findings. The commission will complete its investigation within 12 months from the opening of the proceedings on March 25, 2024.
If the preliminary findings of the commission's investigation are confirmed, the EU could impose a fine on Meta equivalent to 10% of its global annual revenue — i.e. billions of euros. The fine can reach 20% in case of repeated violation.
The move makes Meta the second company to be hit with charges under the EU's Digital Markets Act. Last week, EU regulators argued that Apple was not complying with the law by not allowing app developers to freely direct customers to alternative ways to make purchases.
Preliminary EU investigations are also underway against Alphabet (Google's parent company), Amazon, ByteDance (the owner of TikTok), and Microsoft.
Instagram users couldn't miss the ad
Instagram user Dan Levy first spotted the new "ad break" feature. On his page in X, he said the application did not allow him to "scroll" through the ads as usual.
In another Reddit post on the subject, a user noted that he found this explanation by clicking on the icon next to the ad's countdown timer:
You see an ad break. Ad breaks are a new way to view ads on Instagram. Sometimes, you'll need to view an ad before you can continue browsing.
