European Union Demands Action from Meta to Address Concerns Regarding ‘Payment or Consent’ Model
Until September 1, 2024, Meta has a deadline to address concerns put forth by the European Commission regarding its “payment or consent” advertising strategy, failure of which could result in facing enforcement actions like sanctions.
As per the European Commission announcement, the Consumer Protection Cooperation (CPC) Network has informed the social media platform that the model applied to Facebook and Instagram might potentially breach consumer protection regulations.
The way this new approach has been rolled out is being criticized as misleading and ambiguous, prompting concerns from regulators that users might be pressured into hastily picking between paying for a monthly subscription or agreeing to have their personal data utilized for targeted ads.
Authorities voiced apprehensions that users may have felt compelled to act quickly out of fear of losing immediate access to their accounts and network of contacts.
After introducing a subscription option for European Union (E.U.) users towards the end of 2023, Meta has come under scrutiny for its recent move which essentially doesn’t offer a genuine choice and for imposing a “privacy fee” to protect data rights.
In line with the E.U. Digital Markets Act (DMA), entities holding gatekeeper status must seek explicit user consent before leveraging their data for additional services beyond their primary function (e.g., advertising) or offer an alternative version of the platforms that is less personalized but equivalent to those who opt not to participate.
“Gatekeepers should not condition the utilization of services or specific features on users’ consent,” stated the Commission earlier this month, highlighting that Meta’s framework is in violation of the DMA.
The Commission also criticized Meta for employing unclear language and marketing the service as “free” when, in reality, it obliges users to agree to their data being used for personalized ads, besides making the process perplexing by requiring them to “navigate through different interfaces” to understand how their data is being used and processed for advertising purposes.
While Meta asserts the paid version is a legitimate business model and points to a judgment from the Court of Justice of the European Union (CJEU) last July that a company can provide an equivalent alternative service “for a reasonable fee” without relying on data collection for advertising.
It is important to note that the ruling pertains to new users signing up for Meta’s services, and not existing users (which is where the consent model modifications have led to issues). Whether this can set a legal precedent remains to be determined.
Didier Reynders, E.U. Commissioner for Justice, emphasized, “Consumers must be informed in advance and in a clear manner about how their personal data is being handled. This is a fundamental right that we are committed to safeguarding.”
These developments come after Meta was fined $220 million by Nigeria’s Federal Competition and Consumer Protection Commission (FCCPC) for violating local consumer, data protection, and privacy laws by sharing users’ data on Facebook and WhatsApp without proper consent.
“Meta Parties must immediately cease the practice of sharing WhatsApp user data with other Facebook entities and external parties, until users have actively and voluntarily agreed to each aspect of the permissions intended by Meta parties concerning the data subjects’ information,” read the final directive issued last week.
In a separate incident, the Turkish competition authority imposed a $37.20 million penalty on the American tech giant for its data-sharing practices involving Facebook, Instagram, Threads, and WhatsApp.
Furthermore, Oracle has reportedly agreed to pay $115 million to settle a class-action lawsuit accusing the company of infringing upon users’ privacy by gathering personal information and selling it to third parties.
A fresh investigation initiated by the Italian data protection authority into Google revolves around how the tech giant obtains user consent before merging personal data from various services and whether it provides sufficient information to influence user choices.
The Garante claimed, “Google might be engaging in techniques and strategies for requesting consent, and for establishing consent mechanisms, that could influence the average consumer’s freedom of choice.”
“Consumers should not be misled into thinking that they have to pick either paying without seeing ads or receiving a free service, while actually agreeing to let the company generate ad revenue from their personal information,” noted E.U. Commissioner for Justice, Didier Reynders.
“Traders must transparently inform consumers on how their personal data is being used. This right is fundamental and will be protected.”
About Author
