Meta risks daily fines as EU rejects ad model tweaks

Meta’s “pay or consent” advertising model in the EU is once again under scrutiny from European regulators, who have said the company has only made limited changes and may still not comply with the Digital Markets Act. Meta introduced this model in Europe in November 2023, giving users a choice between paying a subscription fee for an ad-free experience or consenting to tracking and receiving a free, ad-supported service.

On June 27, the European Commission stated that Meta’s revised approach appears insufficient. The Commission said it has informed Meta of its preliminary view that the company is not fully complying with the DMA obligations and that further changes are needed to provide users with a real choice. The Commission added that unless Meta addresses these concerns, the company could face daily fines of up to 5 percent of its average daily worldwide turnover.

A spokesperson for the Commission said that under the DMA, gatekeepers like Meta must seek user consent for combining personal data from different services and, if consent is refused, must still offer an equivalent service that does not rely on personal data processing. According to the Commission, Meta’s current subscription model does not meet these criteria, as it does not offer a less personalised but still free option.

In response, Meta defended its approach, saying it is committed to complying with the DMA and has engaged in discussions with regulators throughout the process. A Meta spokesperson stated that the subscription for no ads model follows direction from the highest court in Europe and complies with the DMA. Meta further said that the company will continue to engage constructively with the Commission and that it believes its approach gives users meaningful choices.

The outcome of this dispute holds relevance for global digital advertising practices, including in India. While India has so far not imposed similar obligations, it is moving towards stronger data protection and privacy frameworks under the Digital Personal Data Protection Act and the proposed Digital Competition Act. The European case demonstrates how regulatory authorities can impose strict penalties to enforce user rights and shape platform business models.

As Meta’s discussions with the EU continue, the company could face significant financial penalties if it fails to make further adjustments. The final decision from the Commission is expected in the coming months.