European Commission says Meta’s “pay or consent” model breaches Digital Markets Act

July 3, 2024

The European Commission has concluded that Meta’s “pay or consent” advertising model fails to comply with the Digital Markets Act (DMA). The binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta’s social networks. 

Preliminary findings on Meta’s pay or consent model

Online platforms often collect personal data across their own, and third party, services to provide online advertising services. Due to their significant position in digital markets, gatekeepers have been able to impose terms of services on their large user base allowing them to collect substantial amounts of personal data. This has given them potential advantages compared to competitors who do not have access to such a vast amount of data, thereby raising high barriers to providing online advertising services and social network services.

Under Article 5(2) of the DMA, gatekeepers must seek users’ consent to combine 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. Gatekeepers cannot make use of the service or certain functionalities conditional on users’ consent.

In response to changes to EU regulations, Meta introduced a “pay or consent” offer in November 2023 whereby EU users of Facebook and Instagram have to choose between:

  • paying a monthly fee for an ads-free version of these social networks; or
  • free-of-charge access to a version of these social networks with personalised ads.

The Commission’s preliminary view is that this model does not comply with the DMA, in particular the requirements set out in Article 5(2). According to the Commission, Meta’s model:

  • Does not allow users to opt for a service that uses less of their personal information but is otherwise equivalent to the “personalised ads” based service.
  • Does not allow users to exercise their right to freely consent to the combination of their personal data.

To ensure compliance with the DMA, users who do not consent should still get access to an equivalent service which uses less of their personal information, in this case to personalise advertising.

What happens next?

The Commission has been working with the relevant data protection authorities. Meta can now respond to the Commission’s view and the Commission will conclude its investigation by 25 March 2025. If the Commission’s preliminary views were to be ultimately confirmed, the Commission would adopt a decision finding that Meta’s model does not comply with Article 5(2) of the DMA.

The Commission can impose fines up to 10% of a gatekeeper’s total worldwide turnover. These fines can go up to 20% if there are repeated infringements. Where there is systematic non-compliance, the Commission can also adopt additional remedies such as obliging a gatekeeper to sell a business or parts of it, or banning the gatekeeper from acquisitions of additional services related to the systemic non-compliance.

The European Data Protection Board has issued an opinion on pay or consent models and the ICO issued a call for views earlier this year.