Meta's 'Pay Or Consent Model' To Draw Charges From EU: Report

The European Union (EU) is reportedly gearing up to charge Meta Platforms Inc. META, the parent company of Facebook, with a breach of its digital regulations. This news comes just a week after a similar case was initiated against Apple Inc.

What Happened: The European Commission plans to utilize its new powers under the Digital Markets Act, Financial Times reported on Monday. The Act, effective from March, is designed to boost consumer choice and promote the growth of European startups. Tech giants, including Meta, must adhere to these regulations from March onwards.

The regulators are likely to raise concerns about Meta’s “pay or consent” model. This model gives users the option to use social networks for free in exchange for data collection consent or pay to avoid their data being shared. Critics argue that this model presents a false choice to consumers, potentially coercing them into permitting their data to be tracked for advertising purposes.

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Last week, the EU accused Apple of suppressing innovation on its App Store, marking the first instance of the bloc utilizing its new powers against a tech giant. These charges against Meta further underscore Brussels’ determination to promptly address alleged anti-competitive behaviour.

Meta’s violation of the Act could result in penalties up to 10% of its global turnover, and up to 20% for any subsequent offense. The EU’s preliminary findings are anticipated to be concluded within a year from the commencement of its official investigation in March.

Meta has yet to respond to the queries sent by Benzinga.

Why It Matters: Earlier in March, Meta had reduced its subscription fee for ad-free Facebook and Instagram services in Europe to address privacy and antitrust regulators’ concerns. However, in June, Meta faced a complaint in Norway for using user images and posts from Facebook and Instagram to train AI models, allegedly violating EU data protection laws.

Price Action: On Friday, Meta’s stock closed at $504.22, marking a decrease of 2.95% from the previous close, according to Benzinga Pro.

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Image via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari