On 1 July 2024, the European Commission (the ‘Commission’) announced its preliminary findings in an investigation of a leading social media platform, concluding that its ‘pay or consent’ advertising model implemented in the EEA does not comply with the Digital Markets Act Regulation 2022/1925 (‘DMA’).

The platform has been designated as a gatekeeper under the DMA in relation to its core platform services (including its social networks and its online advertising services) since September 2023. The DMA prohibits gatekeepers from combining personal data of end users from different core services provided by the gatekeeper or from third-party services unless the user has been presented with the specific choices and has given a GDPR-standard consent. The DMA recitals clarify that gatekeepers should enable end users freely to choose to opt-in to data processing, by (i) offering a less personalised but equivalent alternative, and (ii) not making the use of the core platform service or functionalities conditional upon user’s consent.

The platform introduced a “pay or consent” model for EU users in November 2023. The users had to choose between either (i) subscribing to an ad-free version of this social network against a monthly fee or (ii) a free-of-charge version with personalised ads.

In the Commission's preliminary view, the binary choice presented by the ‘pay or consent’ advertising model does not allow users:

• To opt for an equivalent service without personalised ads; or
• To exercise their right freely to consent to the combination of their personal data.

The Commission expects to conclude its investigation by March 2025.

The Commission’s investigation follows an Opinion of the European Data Protection Board (‘EDPB’) on valid consent in the context of ‘consent or pay’ models implemented by large online platforms, issued in April 2024.

In what is widely regarded as a controversial Opinion, the EDPB concluded that, in the context of ‘pay or consent’ models relating to behavioural advertising, in most cases it will not be possible for large online platforms to comply with the requirements for valid consent under GDPR, if they confront users only with a choice between consenting to processing of personal data for behavioural advertising purposes or paying a fee.

For consent to be free, controllers should take into account such factors as conditionality, detriment, imbalance of power and granularity. Any fee charged cannot make individuals feel compelled to consent and the user’s decision not to consent should not lead the user to suffer negative consequences (e.g. exclusion from a prominent service, lack of access to a professional network or the risk of loss connections). In June 2024, the same social media platform challenged the EDPB opinion in the Court of Justice of the EU.

The Commission’s press release is available here and the investigation file here. The EDPB Opinion is available here.

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