EU regulators charge Meta over its “pay or consent” Instagram subscription model
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Paying for an ad-free Instagram… It’s an option in Europe, but regulators there aren’t double-tapping it. They’ve charged Meta with failing to comply with competition rules under the bloc’s Digital Markets Act. At issue: Meta’s ad-free Insta and FB subscription in Europe, which makes users pay to use the apps ad-free or consent to ads. Meta introduced the “pay or consent” model in November to try to comply with the act (awkward).
Bloc’d: EU regulators said the binary choice breaches the DMA because it fails to give users a free third option that doesn’t rely as heavily on their data for ad targeting.
Meta said the ad-free sub “follows the direction of the highest court in Europe and complies with the DMA.”
Gulp: If Meta’s found to be in violation when the investigation wraps up next year, it could be fined up to 10% of its global annual revenue.
Billions on the line… The landmark DMA law, which was passed in 2022 and went into effect this May, aims to boost tech competition. It gives the EU significant power to rein in Big Tech, and brings major consequences for those who fail to comply. Tech titans found to be in violation could be fined up to 10% of their yearly revenue. Several companies have already made big changes to meet the EU’s new standards (think: Apple allowing different app stores on iPhones in Europe for the first time). But it hasn’t been enough:
Apple last month became the first to be charged with breaking the DMA. In March, the EU hit it with a $2B fine, saying it suppressed music-streaming competition.
Workarounds may not work… this time around. Meta launched the ad-free subscription to align with the EU’s new privacy regulations. Turns out, EU regulators don’t think it aligns. In just a few months, the bloc’s regulators have already charged both Meta and Apple with violating the DMA, and other techies could be next. The EU is showing it means business, and that’s threatening tech’s business.