The EU says Meta’s ‘pay or endorse’ ads breach competition law

EU regulators say Meta violates the bloc’s new competition law, which requires Instagram and Facebook users to pay if they don’t want their personal data used to create targeted ads.

“We want to empower citizens to control their own data and choose a less personalized advertising experience,” said Margrethe Vestager, Executive Vice President for Competition Policy at the European Commission. said in a statement Monday.

The initial findings come as part of a lengthy investigation into whether the social media giant did not comply with the EU’s Digital Markets Act or the DMA, the first antitrust law to focus on big tech companies in a major economy. If the commission upholds its final decision, Meta could face a fine of 10 percent of its annual global revenue.

The EU said Meta’s requirement that users pay if they don’t want personalized ads doesn’t allow them the right to freely consent to the use of their personal data, and that the company failed to provide them with an equivalent service by paying less. Their personal data as required under the DMA.

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

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“We look forward to further constructive dialogue with the European Commission to conclude this investigation,” the agency said.

The DMA took full effect in March, with supporters hailing it as a landmark law preventing large Internet companies from abusing their market power to the detriment of consumers. Critics warned that over-regulation of the Internet industry could have a chilling effect on innovation.

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Since then, EU regulators have moved quickly. In the same month that the DMA entered into force, the EU opened investigations into Apple, Meta and Alphabet, with a one-year deadline to complete the investigations.

Meta introduced a pay-or-consent option for ads in the EU market in November, which will allow users to control how their personal data is used in a show to EU regulators that it complies with the DMA’s requirements. Regulators apparently don’t believe it.

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

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