Facebook and Instagram’s ‘pay or consent’ ad model violates the DMA, says the EU

The EU has formally charged Meta with violations of its Digital Markets Act (DMA), marking its second such charge in as many weeks. The European Commission writes in a preliminary ruling that the “pay or consent” advertising model that launched last year for Facebook and Instagram users runs afoul of Article 5(2) of the DMA by not giving users a third option that uses less data for ad targeting but is still free to use.

Regulators found in their investigation that Meta gives users a “binary choice” that forces them to either choose to pay a monthly subscription fee to get the ad-free version of Facebook and Instagram or consent to the ad-supported version. Where Meta runs afoul of its rules, it says, is by not letting users opt for a free version that “uses less of their personal data but is otherwise equivalent to the ‘personalised ads’ based service” and by not allowing them to “exercise their right to freely consent to the combination of their personal data.”

“Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act,” wrote Margrethe Vestager, who leads the region’s competition policy. “And we want to empower citizens to be able to take control over their own data and choose a less personalised ads experience.”

The commission explains the part of the DMA it believes Meta has violated:

Under Article 5(2) of the DMA, gatekeepers must seek users’ consent for combining their personal data between designated core platform services and other services, and if a user refuses such consent, they should have access to a less personalised but equivalent alternative. Gatekeepers cannot make use of the service or certain functionalities conditional on users’ consent.

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

The commission says that it has informed Meta of its charges and has the opportunity to respond to its findings. If Meta is ultimately found to be in violation when the investigation concludes next year, the EU could fine it as much as 10 percent of its total worldwide revenue, which, for Meta, could be as much as $13.4 billion based on its results for 2023. The penalty could grow to up to 20 percent if the company is found to continue violating the DMA.

Meta is the second company charged since the DMA went into full force in March 2024. The commission asserted last week that Apple’s App Store “steering” policies don’t allow sufficient competition.