The European Commission (EC) has finally taken action to block Meta's heavily criticized plan to charge a subscription fee to users who value their privacy on its platforms.
Surprisingly, this step has not been taken under laws such as the Digital Services Act (DSA), the Digital Markets Act (DMA) or the General Data Protection Regulation (GDPR).
Instead, the EC announced on Monday that Meta faced sanctions under European consumer law if it failed to address key concerns about Meta's so-called 'pay or consent' model.
According to the Commission, Meta's model is problematic because Meta “asked consumers within a day to subscribe to use Facebook and Instagram for a fee, or to consent to Meta using their personal data to show personalized ads, so that Meta can generate revenue from this.”
Because users were given such short notice, they may have been “under unnecessary pressure to quickly choose between the two models, for fear of immediately losing access to their accounts and their network of contacts”, the EC said.
To protect consumers, the EC has joined forces with national consumer protection authorities and sent a letter to Meta asking the tech giant to propose solutions to address the Commission's main concerns by September 1.
That Meta's “pay or consent” model may be “misleading” is a major concern, as it uses the term “free” for advertising-based plans, even though Meta can “generate revenue by using their personal data to show them personalized ads.” It appears that Meta does not consider giving away personal information a cost to users, while the EC's Justice Commissioner, Didier Reynders, apparently does.
“Consumers should not be lured into thinking that they are paying and will no longer see advertising, or that they are getting a service for free, when instead they are agreeing to the fact that the company uses their personal data to generate revenue from advertising,” Reynders said. “EU consumer protection law is clear in this regard. Traders must inform consumers in advance and in a fully transparent manner about how they use their personal data. This is a fundamental right that we will protect.”
Furthermore, the EC is concerned that Meta users may be confused about how to “navigate through different screens in the Facebook/Instagram app or web version and click on hyperlinks that take them to different parts of the Terms of Service or Privacy Policy to learn how their preferences, personal data and user-generated data are used by Meta to show them personalized ads.” They may also find Meta’s “imprecise terms and language” confusing, such as Meta referring to “your info” rather than clearly referring to consumers’ “personal data.”
To address the EC’s concerns, Meta may need to give EU users more time to decide whether to pay to subscribe or consent to the collection of personal data for targeted advertising. Or Meta may need to take more drastic steps by adjusting the language and screens used when obtaining consent to collect data, or possibly even scrapping the “pay or consent” model altogether as pressure mounts in the EU.
So far, Meta has defended its model against claims that it violates the DMA, DSA, and GDPR. A Meta spokesperson told Ars that Meta continues to defend its model while blocking the EC’s latest measures.
“Subscriptions as an alternative to advertising are a well-established business model in many industries,” the Meta spokesperson told Ars. “Ad-free subscriptions follow the guidelines of the highest court in Europe and we are confident that it complies with European regulations.”
Meta's model is 'cunning', says EC
Since last year, the social media company has claimed that its “ad-free subscription” model has been “endorsed” by Europe’s highest court, the Court of Justice of the European Union (CJEU).
However, privacy advocates have noted that this alleged approval followed a CJEU case under the GDPR and was presented only as a hypothetical case, rather than a formal part of the ruling, as Meta appears to interpret.
The CJEU said that “users must be able to individually refuse” — “in the context of” signing up for services — “to give their consent to specific data processing operations that are not necessary” for Meta to provide such services “without being obliged to abandon the service altogether.” That “means that those users must be offered, if necessary in return for appropriate compensation, an equivalent alternative that does not involve such data processing operations,” the CJEU said.
The nuance here may be important when it comes to Meta’s proposed solutions, even if the EC accepts the CJEU’s suggestion of an acceptable alternative as setting some kind of legal precedent. Since the consumer protection authorities have brought the action based on the fact that Meta suddenly changed the consent model for existing users – not “in the context of” signing up for services – Meta may struggle to convince the EC that existing users were not misled and pressured into paying for a subscription or consenting to ads, given how quickly Meta’s policies changed.
Meta risks sanctions if a compromise cannot be reached, the EC said. For example, under the EU’s Unfair Contract Terms Directive, Meta could be fined up to 4 percent of its annual turnover if consumer protection authorities are not satisfied with Meta’s proposed solutions.
The EC Vice-President for Values and Transparency, Věra Jourová, said in a press release that Meta's abrupt introduction of the 'pay or consent' model is 'sneaky'.
“We are proud of our strong consumer protection laws that give Europeans the right to be accurately informed about changes like those proposed by Meta,” Jourová said. “In the EU, consumers can make truly informed choices and we are now taking action to protect this right.”
