Meta is being accused of breaching EU competition regulations.

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Allegations of violating EU competition regulations against Meta

Meta, the parent company of Facebook, is currently facing accusations from EU regulators for allegedly breaching the bloc’s antitrust regulations regarding its ad-supported social networking service. The European Commission has raised concerns about Meta’s “pay or consent” model, where users are given the option to either pay for an ad-free experience or consent to their data being used for personalized advertising when using platforms like Facebook and Instagram in Europe.

The Commission expressed that this model limits users’ choices by not providing them with a less personalized but equivalent version of Meta’s social networks. Meta, however, has defended its ad-supported subscription model, stating that it aligns with European court rulings and complies with the DMA (Digital Markets Act).

Meta implemented this model as a response to a previous ruling from the European Court of Justice, which emphasized the option for companies to offer a data-collection-free alternative for their services. Despite Meta’s efforts to adhere to regulatory requirements, the EU Commission argues that the ad-supported offering falls short of DMA compliance as it restricts users from opting for a less data-intensive service and hinders their ability to freely consent to targeted advertisements.

Potential consequences and regulatory actions

The Digital Markets Act (DMA), which came into effect in March, empowers the EU to penalize large digital companies for anti-competitive behaviors and compel them to allow access to their services for competitors. Under DMA provisions, companies like Meta could face substantial fines amounting to 10% of their global annual revenue, with a possibility of escalation to 20% for repeated violations.

If Meta is found in violation of DMA regulations, it could potentially incur penalties up to $13.4 billion, calculated based on its projected 2023 earnings. Following the preliminary findings from the EU Commission, Meta is allowed a defense opportunity through written submissions.

The ongoing investigation into Meta, initiated concurrently with inquiries into tech giants Apple and Alphabet in March, is scheduled to conclude within a year from its commencement.

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