The European Commission yesterday said that Meta is not compliant with the European Union’s Digital Markets Act, despite offering Facebook and Instagram users in Europe the option to pay a subscription fee instead of allowing their personal data to be gathered and exploited by advertisers.
Meta launched the subscription offer in Europe last November in part to comply with the DMA’s rules in relation to data exploitation. However, the Commission says that a third option should also be offered whereby users who do not fully consent to Meta’s standard personal data conditions can get “access to an equivalent service which uses less of their personal data”.
Margrethe Vestager, EVP in charge of competition policy, said the DMA is “there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access”. Meta’s current binary system for handling personal data, dubbed a ‘pay or consent’ model, is, she added, “in breach of the DMA”.
In response, a Meta spokesperson insisted that “subscriptions as an alternative to advertising are a well-established business model across many industries”, and that Meta developed the consent or pay model “to address several overlapping regulatory obligations, including the DMA”. They then added, “We will continue to engage constructively with the Commission”.
The DMA, which went fully into force earlier this year, aims to ensure that the major tech companies and digital platforms do not exploit their market dominance to the detriment of smaller rivals.
Apple is also under pressure from EU regulators as a result of the DMA over the in-app payment rules that Spotify has long complained about. Like Meta, Apple has made some changes to try to comply with the DMA, but the Commission last month said it still wasn't compliant.
Explaining the sections of the DMA relevant to Meta in more detail, the Commission said in a statement yesterday, “Due to their significant position in digital markets”, companies like Meta “have been able to impose terms of services on their large user base allowing them to collect vast amounts of personal data”. That includes data from “core platform services and other services”.
“This has given them potential advantages compared to competitors who do not have access to such a vast amount of data”, it continued, “thereby raising high barriers to providing online advertising services and social network services”.
Article five of the DMA says that platforms like Facebook and Instagram must seek users’ consent “for combining their personal data between designated core platform services and other services” and, if a user refuses such consent, “they should have access to a less personalised but equivalent alternative”. Plus platforms “cannot make use of the service or certain functionalities conditional on users’ consent”.
Meta reckons that the “less personalised but equivalent alternative” to its core product is the paid for subscription service, but the Commission says that is not “equivalent”, and therefore the proposed less personalised free version of Facebook and Instagram is also required.
Meta will now respond to the Commission’s preliminary view. If its non-compliance with the DMA is ultimately proven, the Commission can impose fines up to 10% of the social media company’s total worldwide turnover. Which is an awful lot of money.
