EU says Meta's 'pay or consent' ads breach competition law

The preliminary findings come as part of a longer investigation into whether the social media giant is in breach of the EU’s Digital Markets Act, or DMA, the first antitrust law to focus on big tech companies in a major economy. Meta could face fines of up to 10% of its annual global revenue if the commission upholds that position in its final decision.

The EU said Meta’s demand for users to pay if they do not want personalized ads does not allow 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 using less of their personal data, as required under the DMA.

Meta said in a statement that it believes the “ad-free subscription” model is consistent with the DMA.

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

The DMA went into full effect in March, with supporters hailing it as a landmark law that would prevent big internet companies from abusing their market power at the expense of consumers. Critics warned that overregulating the internet could have a chilling effect on innovation.

Since then, EU regulators have moved quickly. In the same month that the DMA came into force, the European Union opened investigations into Apple, Meta, and Alphabet, setting a one-year deadline for completing the investigations.

Meta introduced the option to pay or consent for ads in the EU market in November, in a demonstration to EU regulators that it complies with DMA requirements to allow users to control how their personal data is used. It seems that the organizers were not convinced.

The European Union also notified Apple and Microsoft in recent days that their business practices violate antitrust rules.