Preliminary findings: the EU says Meta's pay or consent ad model breaches the DMA; Meta faces a fine of up to 10% of its global annual turnover if found guilty

Meta Platforms (META.O) was charged by EU antitrust regulators on Monday for failing to comply with landmark tech rules …

Reuters 2024-07-01 Foo Yun Chee

Context & Ripple Effects

The case follows June reporting that EU regulators were preparing a DMA charge over Meta's choice between an ad-free subscription and consent to behavioral advertising. It also sits after the Irish privacy regulator's €390 million behavioral-advertising penalty, underscoring sustained regulatory pressure on Meta's EU ad model.

The preliminary finding turns that policy dispute into a formal DMA enforcement risk, with a potential penalty tied to Meta's global annual turnover rather than only its European operations.

First-order effects

Meta must defend or alter its EU pay-or-consent design while facing a possible DMA fine of up to 10% of global annual turnover if non-compliance is confirmed.
EU regulators establish a preliminary view that the current choice architecture does not meet DMA requirements, raising the stakes for Meta's Facebook and Instagram monetization in the region.

Second-order effects

Meta may have to redesign the subscription, consent, or advertising options it presents to EU users, potentially changing the trade-off between ad revenue and paid access.
Other DMA-covered platforms using consent-based monetization will have to assess whether their own user-choice flows invite similar scrutiny.

Third-order effects

If upheld, the case would reinforce the DMA as a tool for regulating how dominant platforms convert user consent into advertising revenue, not just their market-access practices.
The longer-term uncertainty is whether regulators can define a viable consent-and-payment structure that preserves user choice without allowing platforms to make privacy the more expensive option.

The trend: European platform regulation is moving from headline fines toward prescriptive scrutiny of the interfaces and commercial terms through which large platforms obtain consent and monetize users.

Discussion

@andrewpardoe Andrew Pardoe on threads
Is the EU's position really “supply Facebook without a revenue source”? This isn't my area: I have little stake in this (except for the obvious.) What incentive would Meta have to continue in the EU? Or any other ad-supported business, for that matter?
@maik.zumstrull.net Maik Zumstrull on bluesky
The elephant in the room on this is that hundreds of EU based press outlets are illegally using pay-or-accept on their websites. — By citing the DMA as the issue, and not the more appropriate GDPR, they can avoid enforcing the law against their client media - which aren't DMA g…
@tjasa_pet @tjasa_pet on x
Not surprisingly, Commission's preliminary findings indicate Meta's pay or consent model does not comply with Article 5(2) DMA, as it fails to provide users with a less personalised but equivalent version of Meta's social networks.
@florian4gamers Florian Mueller on x
Unlike the EU, Meta can't finance its service through taxes. That's why there has to be a working revenue model, some quid pro quo between Meta and users. The DMA doesn't outlaw letting users pay for services.
@jefflonsdale Jeff Lonsdale on x
The question is how long can the EU fine these global tech companies on a percentage of their global revenue without them strategizing how to exit the market. The companies won't leave all at once, first they will offer nerfed products rather than leave a hole in the market for
@beuc @beuc on x
Good news the @EU_Commission is taking enforcement action based on #DMA against Meta's pay-or-consent model! It comes on top of various, recent complaints the BEUC network launched against Meta for breaches of consumer law and data protection law. ➡️ https://www.beuc.eu/...
@vestager Margrethe Vestager on x
📢We informed @Meta of our preliminary finding that its “pay or consent” model fails to comply with the Digital Markets Act 👉It forces users to consent to the combination of their personal data, and fails to provide a less personalised equivalent 📰 https://www.shorturl.at/jCj8Y
@eu_commission @eu_commission on x
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 personalised but equivalent version of [i…
@thierrybreton Thierry Breton on x
The #DMA is here to give back 🇪🇺 users the power to decide over their #data #Meta has forced millions of users across EU into a binary choice : “pay or consent”. In our preliminary conclusion this is a breach of the DMA. Today we take an important step to ensure Meta complies. [i…
@eu_competition @eu_competition on x
#EUCompetition #DMA #DigitalMarketsAct Commission 🇪🇺 sends preliminary findings to Meta over its “Pay or Consent” model for breach of the Digital Markets Act 👇 🔗➡️ https://europa.eu/!yjjm9k [image]

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