Sunday, July 21, 2024

EU warns Meta over paid ad-free option on Instagram, Facebook

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The US tech giant rolled out the option after the European Union’s top court ruled Meta must first get consent before showing ads to users, in a decision that threatened its business model of tailoring ads based on individual users’ online interests and digital activity.

Meta’s model does not allow users to exercise their right to “freely consent” to allowing their personal data from its various services, including Facebook, Instagram, Marketplace, WhatsApp and Messenger, to be combined to target them with personalised online ads, the commission said.

Meta’s model also does not give users the option of a service that is less personalised but still equivalent to its social networks, it said.

“Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA,” Meta said in a statement. “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”

The commission had opened its investigation shortly after the rule book took effect in March. It is a sweeping set of regulations aimed at preventing tech “gatekeepers” from cornering digital markets under threat of heavy financial penalties.

One of the DMA’s goals is to rein in the power of Big Tech companies that have collected vast amounts of personal data on their users, giving them an edge on rivals competing in online ad or social media services.

The commission indicated that in order for Meta to comply, it would like to see an option that does not rely on a user’s full personal information being shared for advertising.

“The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access,” European Commissioner Thierry Breton, who oversees the bloc’s digital policy, said in a statement.

The Meta sign outside the headquarters of the Facebook parent company in Mountain View, California. Photo: Reuters

Meta now has a chance to respond to the commission, which must wrap up its investigation by March 2025. The company could face fines worth 10 per cent of its annual global revenues, which could run into the billions of euros.

Under the DMA, Meta is classed as one of seven online gatekeepers while Facebook, Instagram, WhatsApp, Messenger and its online ad business are among two dozen “core platform services” that need the highest level of scrutiny.

Monday’s decision is the latest in flurry of regulatory activity by Brussels targeting Big Tech companies.

The EU levelled its first charges under the DMA a week ago, accusing Apple of preventing app makers from pointing users to cheaper options outside its App Store.

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