Brief news
EU officials have stated that Meta, the parent company of Facebook, has not followed the bloc’s trade rules regarding its new ad-supported social networking service. The ad-supported subscription choice, called a “pay or consent” approach, requires users to either pay to use Meta’s services without ads or agree to their data being used for personalized ads. The European Court of Justice has stated that Meta’s plan of charging for services with ads “complies with the direction of the highest court in Europe and accords with the Digital Markets Act (DMA).” Meta has stated that it anticipates returning to more constructive dialogue with the European Commission to bring this inquiry to a closure. The Digital Markets Act (DMA) of the EU stopped being a theory in March, and companies could be fined up to 10% of their world annual income if found to have broken the DMA.
Illustrated news
Monday, EU officials said that Meta, the company that owns Facebook, had not followed the bloc’s important trade rules when it came to its new ad-supported social networking service.
The ad-supported subscription choice was called a “pay or consent” approach by the Commission. This means that users must either pay to use Meta’s services without ads or agree to their data being used for personalised ads. Last year, the service came out for Facebook and Instagram in Europe.
Authorities said in a statement Monday that they “preliminarily view” that this two-way choice forces users to agree to the combination of their personal data and does not offer them a less personalised but similar version of Meta’s social networks.
Meta said in a statement to CNBC that its plan of charging for services with ads “complies with the direction of the highest court in Europe and accords with the DMA.”
The spokesperson also said, “We anticipate returning to more constructive dialogue with the European Commission to bring this inquiry to a closure.”
Last year, the European Court of Justice, which is the EU’s highest court, said that a company could provide a “alternative” version of its service that does not rely on collecting data for ads. This is why Meta created the new model.
Meta has said before that this decision is why they added the monthly deal.
The Commission said in a statement on Monday that Meta’s ad-supported service didn’t follow the DMA for two main reasons. The first is that users can’t choose a service that uses less personal data but is still the same as the “personalised ads” service.
As long as users can still “get access to an equivalent service that uses less of their personal data, in this case for the personalisation of advertising,” regulators said that was fine.
The other reason the EU gives is that users of the Meta service that is supported by ads can’t use their right to “freely consent” for their personal data to be used to show them online ads.
Fines of considerable magnitude are at issue.
The Digital Markets Act (DMA) of the EU stopped being a theory in March of this year. Big digital companies are supposed to follow the law and not do things that hurt competition. They will also have to let competitors use some of their services.
Under the DMA, companies could be fined very large amounts of money, up to 10% of their world annual income. If there are more than two breaches, that number could go up to 20%.
If Meta is found to have broken the DMA in the Commission’s final results, the company could be fined as much as $13.4 billion, based on how much money it made in 2023.
Meta has a chance to explain itself in writing now that it has seen the EU’s preliminary results.
The Commission’s investigation began in March along with two other investigations into tech giants Apple and Alphabet. It will be over within a year of the start of the processes.
Source : CNBC News
