The European Union has accused Meta Platforms, the parent company of Facebook and Instagram, of breaching the EU's new digital-competition law 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 European Commission stated 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 Commission's preliminary findings from its investigation into this model indicate that it does not comply with the Digital Markets Act (DMA), which aims to regulate big tech companies. Meta introduced the subscription option last year in response to regulatory and legal scrutiny of its advertising-based business model, following a ruling from the European Court of Justice. However, the EU regulators argue that the subscription model does not provide users with a fair alternative and violates the new competition law. Meta has defended its ad-supported 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 Commission's preliminary findings suggest that Meta must offer "equivalent" versions of Facebook and Instagram that use less personal data in order to comply with the DMA. Meta's shares have been affected by this regulatory scrutiny, with a decline of more than 30% this year amid concerns about the macro environment and weaker-than-expected results. The company's introduction of the subscription option, intended to address regulatory issues, has instead led to legal challenges and regulatory investigations in the European Union.
