Meta has been given a deadline of September 1, 2024, to provide a response to concerns raised by the European Commission regarding its “pay or consent” advertising approach. Failure to address these issues may result in enforcement actions, including sanctions.
According to a statement from the European Commissionsource, the Consumer Protection Cooperation (CPC) Network has informed the social media company that the current advertising strategy implemented on Facebook and Instagram could potentially violate consumer protection regulations.
The Commission characterized this new policy as deceptive and confounding, with concerns being raised that users might feel pressured to quickly decide between paying for a monthly subscription or granting consent for their personal data to be used in targeted advertisements.
Authorities expressed apprehension that this pressure could stem from users’ concerns that they would immediately lose access to their accounts and connections.
Meta, which rolled out a subscription option for users within the European Union (E.U.) in late 2023, has encountered criticism for what seems to be a lack of genuine choice and for charging a “privacy fee” to exercise data protection rights, as reported bysource.
Under the E.U. Digital Markets Act (DMA), companies in gatekeeper positions must obtain explicit consent from users before using their data for services beyond their core offerings, such as advertising. Alternatively, they must provide a less personalized version of their platforms for users who opt out.
“Gatekeepers cannot make the usage of services or certain features contingent on users’ consent,” highlighted the Commission earlier this month, revealing that Meta’s model contradicts the DMA regulations.
The Commission also criticized Meta for using ambiguous terms and promoting the service as “free” while essentially requiring users to agree to their data being utilized for personalized advertisements. Additionally, users are faced with a confusing process of navigating various screens to understand how their data is employed for advertising purposes.
On the other hand, Meta defends the paid subscription model as a valid business approach, citing acourt ruling by the Court of Justice of the European Union (CJEU) last July permitting companies to offer an alternative version of their service for a fee without relying on data for ads.
However, it is important to note that this ruling primarily focuses on new users signing up for Meta’s services and not on existing users, where issues related to the consent model changes arise. The interpretation of this ruling as a legal precedent remains to be determined.
E.U. Commissioner for Justice, Didier Reynders, emphasized, “Consumers should not be misled into thinking they would either pay to avoid ads or receive a free service, only to later realize that the company profits from displaying ads using their personal data.”
“Businesses must transparently inform consumers upfront on how their personal data is utilized. This is a fundamental right that will be safeguarded,” he added.
The latest development comes shortly after Nigeria’s Federal Competition and Consumer Protection Commission (FCCPC) imposed a fine of $220 million on Meta following an investigation revealing that the company violated local consumer protection, data privacy, and data protection laws by collecting user information without consent.
Last week, the FCCPCannounced a final order instructing Meta to cease sharing WhatsApp user data with other Facebook entities and third parties until users have actively and willingly consented to the intended data uses.
In a separate incident, the Turkish competition boardlevied a fine of $37.20 million against the American tech company for its data-sharing practices across Facebook, Instagram, Threads, and WhatsApp in May 2024.
Additionally, there are reports indicating Oracle’s agreement to pay $115 million to settle a consumer privacy lawsuit in the U.S., in which users claimed their personal data was collected and sold to third parties.
Meanwhile, Google is facing scrutiny by the Italian data protection authority over its methods of obtaining user consent for combining personal data from various services and providing sufficient information to influence user decisions.
The Garantealleged that Google might be using manipulative practices in requesting and obtaining user consent, potentially limiting users’ freedom of choice.
“Customers might be prompted to make a commercial decision they wouldn’t have otherwise made by agreeing to the combination and cross-use of their personal data across the multiple services offered,” the Garante stated.
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