The European Union (EU) is preparing to charge Meta under the Digital Markets Act (DMA) for its ‘pay or consent’ model offered to customers in the EU, the European Economic Area (EEA) and Switzerland. The EU decision, which was told to the Financial Times (FT) by three sources with knowledge of the matter, comes a week after the EU also attacked Apple.

The ‘pay or agree’ model in question was Launched by Meta Towards the end of last year. By paying a monthly subscription, users were given the choice to use Facebook and Instagram without advertisements. The EU is now expected to say that Meta is giving users a so-called “false alternative”.

Under EU DMA rules, tech giants like Meta have to get consent from users when they intend to combine or cross-use personal data across different core platform services. If the EU takes issue with Meta requiring users not to see ads, that essentially means Meta has to offer its services without personalized ads for free if users refuse to give consent.

It should be emphasized that the European Union itself has not yet come out with this information. The European Commission (EC), which leads the European Union, declined to comment on the matter and Meta has not yet responded either.

If the EU does proceed down this path, Meta faces a penalty of 10 percent of global turnover and up to 20 percent for repeat offenses. The EC began investigating tech giants in March, so it has until next March to finalize its initial findings.

While the European Commission may feel empowered now with its new powers, it could ultimately lead to a backlash from big tech in the future. We’ve already seen products like Google Gemini and Apple Intelligence slow to launch or not launch at all in the EU due to regulatory concerns. So while EU users may get additional protections, they may also be blocked from innovative products that could cause harm in other ways such as reduced productivity.

source: FT | Photo via Depositphotos.com