The European Union (EU) is getting ready to charge Meta under the Digital Markets Act (DMA) for its 'pay or consent' model which is offered to customers in the EU, European Economic Area (EEA), and Switzerland. The decision by the EU, which was told to the Financial Times (FT) by three sources with knowledge of the matter, comes a week after the EU targeted Apple too.
The 'pay or consent' model in question was launched by Meta towards the end of last year. By paying a monthly subscription, users were given the choice of using Facebook and Instagram without any ads. The EU is now expected to say that Meta is giving users a so-called "false alternative".
Under the EU's DMA rules, tech giants like Meta need to get consent from users when they intend to combine or cross-use personal data across different core platform services. If the EU is taking issue with Meta charging users not to see ads, it's essentially saying that Meta should offer its services without personalised ads for free if users refuse to give consent.
It should be emphasised that the EU itself has not yet come out with this information. The European Commission (EC), which leads the EU, has declined to comment on the matter and Meta has not commented yet either.
If the EU does pursue this course, Meta faces a penalty of 10 per cent of its global turnover and up to 20 per cent for repeat offences. The EC began investigating tech giants in March so has until next March to finalise its preliminary findings.
While the European Commission may feel emboldened now with its new powers, it could ultimately lead to a backlash from big tech in the future. We have already seen products like Google Gemini and Apple Intelligence being slow to launch or not launching at all in the European Union over regulatory fears. So while EU users may get more protections, they may also be blocked off from innovative products which could cause harm in other ways such as reduced productivity.
Source: FT | Image via Depositphotos.com
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