In November of 2023, Meta launched a service in the European Union that allowed users to utilize the Facebook and Instagram platforms “ad free” for a monthly fee. The subscription service was meant to address regulatory concerns about Meta’s vast data collection and surveillance-based advertising system that tracks consumers across websites. The concept introduced a binary choice: Either subscribe to an ad-free version of these social networks for a monthly fee or use a free version that includes personalized ads.

On July 1, 2024, the European Commission announced its disapproval of this model and preliminary findings against Meta’s “pay or consent” process, stating that it violates the Digital Markets Act (DMA). In fact, the European Commission posted the following on its own Facebook account:

The “Pay or Consent” advertising model of Meta fails to comply with the Digital Markets Act. Our preliminary findings show that this choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta’s social networks.

The DMA is the EU’s legislation aimed at ensuring fairer and more contestable markets in the digital sector. It establishes clear criteria to identify “gatekeepers” — large digital platforms providing core platform services like online search engines, app stores, and messenger services. These gatekeepers must comply with a set of obligations and prohibitions to ensure an open and competitive digital market. The DMA complements existing EU competition rules without altering them.

Gatekeepers under the DMA must allow third parties to interoperate with their services, grant business users access to data generated on their platform, and provide transparency in advertising. They are prohibited from favoring their own services over those of competitors, preventing users from uninstalling pre-installed software, and tracking users for targeted advertising without effective consent.

The DMA’s findings focused on two issues. First, that the service effectively required an individual to relinquish all rights to their personal data unless they were willing to pay for an equivalent service. Second, the binary options provided were an illusion in choice and failed to meet the requirements for freely given consent.

These are also issues that reverberate outside of the EU. U.S. state regulators, as well as the Federal Trade Commission (FTC), have been focused on similar concerns – namely, whether companies can require personal information as part of a financial incentive without a discriminatory effect and what constitutes freely given, informed consent to process personal information.

In Part II of this discussion, we will take a deeper dive into the European Commission’s findings against Meta and how those findings may influence privacy law and enforcement more broadly, including here in the United States.

Our team at Bradley will continue to monitor these developments.