Meta’s pay-or-accept business model violates consumer protection laws, the EU regulator found. The Consumer Protection Cooperation (CPC), the EU’s consumer watchdog, says the company is “misleading” and “confusing” users by taking this approach. Meta has until September 1, 2024, to make changes to its user agreement.
EU Concerns and Charges
Meta’s pay-or-opt model, introduced last year, gives Facebook and Instagram users the choice of paying up to €12.99 a month for ad-free social media use or opting into the company’s collection and use of personal data to serve personalized ads. The EU considers this approach a violation of user privacy and has already charged the company under the Digital Markets Act and fined it for transferring user data abroad.
EU regulators, who launched an investigation following complaints from consumer rights groups, say Meta deliberately uses confusing language that makes its terms of service agreements difficult for Facebook and Instagram customers to understand. According to regulators, the company forced users to make choices without giving them enough time to understand. We’ll keep you updated on further developments.
Official Statements and Penalties
European Commissioner Didier Reynders is confident that companies should not “lure” customers into thinking that they won’t see advertising if they pay for a subscription or that the service will be free but with advertising because the company makes a profit from users’ personal data, notes NIX Solutions. Companies should be transparent about how they use user data, he added.
The CPC accuses Meta of violating the Unfair Commercial Practices Directive and the Unfair Contract Terms Directive. Fines for violating these requirements can reach 4 percent of a company’s annual revenue in the EU countries where the charge is brought.
“Subscription as an alternative to advertising is a well-established business model in many industries,” says Meta spokesman Matt Pollard. “The ad-free subscription follows the guidance of Europe’s highest court and we are confident that it complies with European regulations.”