Meta charged with violating Europe’s landmark tech competition law, faces billions in fines

Meta was charged Monday with violating Europe’s sweeping tech competition law by forcing customers into a restrictive “pay or consent” model for ads on Instagram and Facebook — escalating a longstanding beef over user privacy.

Billionaire Mark Zuckerberg’s firm rankled regulators by rolling out a subscription service last year in which users could pay the equivalent of $14 per month for an ad-free experience on the apps – or consent to Meta using their personal data for targeted ads.

If Meta is confirmed to have breached the law, the company could face fines of up to 10% of its total worldwide revenue – a figure that could amount to nearly $13.5 billion, given the company’s global sales in 2023 totaled $134.90 billion.

The charges are the latest in a long-running regulatory spat battle involving Meta, which has been accused of failing to comply with the European Union’s strict data privacy law known as the General Data Protection Regulation, or GDPR.

Last year, the EU slapped Meta with a record $1.3 billion fine for improperly transferring European users’ data to the US.

The European Union’s competition watchdog said Meta’s advertising model violates the Digital Markets Act, which took effect in March and established new rules governing the behavior of tech firms identified as the internet’s “gatekeepers.”

“In the commission’s preliminary view, this binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta’s social networks,” the European Commission said in a statement.

EU officials said Meta should offer a third option for users who don’t consent to tracking or pay a subscription fee – a free version of its apps that doesn’t rely on personal data for displayed ads.

Meta earns a huge chunk of its annual revenue from digital advertising. In the first quarter of 2024 alone, the social media giant raked in more than $35 billion in ad sales – roughly one-fourth of which came from Europe.

“We want to empower citizens to be able to take control over their own data and choose a less personalized ads experience,” EU competition chief Margrethe Vestager said in a statement.

A company spokesperson said Meta’s subscription plan was in compliance with a recent ruling from Europe’s top court.

“Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” a Meta spokesperson said in a statement.

Meta has been informed of the charges and will be given a chance to defend its business practices, the commission said. The investigation is expected to wrap up by March 2025.

EU officials said the company violated specific provisions of the Digital Markets Act by failing to allow users to “opt for a service that uses less of their personal data but is otherwise equivalent to the ‘personalized ads’-based service.”

Meta’s digital ads model also “does not allow users to exercise their right to freely consent to the combination of their personal data.”

Meta is the second company to face formal charges during Europe’s Digital Markets Act.

Last week, EU officials slapped Apple with preliminary charges for preventing app developers from easily steering customers to cheaper offers outside its App Store.

Like Meta, Apple could face billions in fines if the charges are upheld.

In a separate action, Europe accused Microsoft of potentially violating the law by bundling its Teams software with office productivity apps such as Office 365 and Microsoft 365.

With Post wires