Meta's 'pay or consent' ads violate competition law: EU

EU regulators say Meta violated the bloc's new competition law, which would require Instagram and Facebook users to pay if they do not want their personal data used for targeted ads.

“We want to enable citizens to take control of their data and choose a less personalized advertising experience,” Margrethe Vestager, the European Commission's executive vice-president for competition policy, said in a statement Monday.

The preliminary findings come as part of a lengthy investigation into whether the social media giant is not complying with the EU's Digital Markets Act, or DMA, the first antitrust law focused on Big Tech companies in a major economy. Meta could face a fine of up to 10 percent of its annual global revenue if the Commission upholds this stance in its final decision.

The EU said Meta’s condition that users must pay if they do not want personalised advertising does not give them the right to freely consent to the use of their personal data, and that the company has failed to provide them with an equivalent service by using their personal data less frequently, as required under the DMA.

Meta said in a statement that it believes its “subscription without ads” model complies with the DMA.

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“We look forward to further constructive dialogue with the European Commission to conclude this investigation,” the company said.

The DMA came into full effect in March, with supporters calling it a landmark law that would prevent large internet companies from abusing their market power to the detriment of consumers. Critics warned that excessive regulation of the internet sector would result in a negative impact on innovation.

Since then, EU regulators have moved swiftly. The same month the DMA came into effect, the EU began investigating Apple, Meta and Alphabet, setting a one-year deadline for completion of the probes.

Meta introduced a pay or consent option for ads in the EU market in November to show EU regulators that it was complying with the DMA's requirements to allow users to control how their personal data is used. Regulators apparently disagreed.

The EU has also notified Apple and Microsoft in recent days that their business practices violate anti-competition rules.

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