The European Union has accused Meta Platforms, the parent company of Facebook and Instagram, of violating the EU's digital competition rules with its "pay or consent" advertising model. This model offers users the option to pay for an ad-free experience or consent to their data being used for personalized advertising. The EU regulators argue that this binary choice forces users to consent to the combination of their personal data and fails to provide them with a less personalized but equivalent version of Meta's social networks. The European Commission's preliminary findings state that Meta's model does not comply with the Digital Markets Act (DMA) and that Meta must offer "equivalent" versions of Facebook and Instagram that use less personal data to comply with the DMA. Meta introduced the subscription option last year in response to regulatory and legal scrutiny of its advertising-based business model, aiming to provide users with an alternative to targeted advertising. However, the EU regulators argue that this subscription model violates the DMA and does not provide users with a fair alternative. Meta has defended its subscription model, stating that it follows the direction of the highest court in Europe and complies with the DMA. The company has expressed its willingness to engage in further constructive dialogue with the European Commission to resolve the investigation. The EU's charges against Meta come amid a broader selloff in tech stocks, with Meta's shares down more than 30% this year. This development reflects the ongoing regulatory challenges faced by major tech companies in the EU and the impact of these challenges on investor sentiment.
