• by Wendy Davis  @wendyndavis, July 2, 2024

Regulators in Europe have made a preliminary finding that Meta Platforms violates the Digital Markets Act by requiring Facebook and Instagram users to choose between accepting online ad targeting or paying subscription fees for ad-free versions of the services.

Meta's pay-for-privacy model, unveiled last October, falls short of the Digital Market Act's requirements in two ways, the European Commission stated when announcing its preliminary opinion. 

First, according to regulators, the approach doesn't allow users to choose an equivalent service that uses less personal data.

Secondly, Meta's model “does not allow users to exercise their right to freely consent to the combination of their personal data,” the commission wrote.

“Users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalization of advertising,” the commission wrote.

The opinion comes around nine months after Meta said it would charge residents of the European Union, European Economic Area and Switzerland monthly fees for ad-free versions of Facebook and Instagram on Android or iOS operating systems. Residents of those areas who didn't pay fees could continue to access the services, but only if they accepted personalized ads, Meta said.

A Meta spokesperson said the company's approach complies with the Digital Markets Act and “follows the direction of the highest court in Europe,” referring to a July 2023 decision by the European Court of Justice.

“We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” the spokesperson said.

The European judges said in the 2023 ruling that social networking companies could not deny service to people who didn't consent to the processing of their data, unless the companies offered an equivalent alternative service -- “if necessary for an appropriate fee” -- that didn't involve data processing.

The decision interpreted the General Data Protection Regulation, which requires companies to have a valid basis to process residents' data. That standard allows companies to process data if people consent, but only if the consent is “freely given.”

The newer Digital Markets Act, which took effect earlier this year, also broadly requires “gatekeepers” -- meaning Meta and other large tech companies -- to obtain users' consent before tracking them for ad targeting purposes.

Despite last year's ruling by the European Court of Justice, privacy officials at the European Data Protection Board recently cast doubt on Meta's pay-or-consent approach to data.

“In most cases, it will not be possible for large online platforms to comply with the requirements for valid consent if they confront users only with a binary choice between consenting to processing of personal data for behavioral advertising purposes and paying a fee,” that board said in a non-binding opinion issued in April.

The board handed down the opinion at the request of Dutch, Norwegian and German authorities who asked the agency to weigh in on whether large platforms can lawfully implement consent-or-pay approaches to behavioral targeting.

The European agency said in its ruling that requiring people to either consent to behavioral advertising or pay for services “should not be the default way forward for controllers.”

The board added that large online platforms should offer users a free “equivalent” alternative to accepting behavioral advertising.