The European Union is scrutinizing Meta's newly introduced payment model, questioning whether the tech giant has misled consumers in the rollout of its latest offering. On Monday, the European Commission announced that consumer protection authorities across the EU are investigating Meta, the parent company of Facebook and Instagram, over potential violations of consumer protection laws.
"We will not stand by and watch some sneaky practices that mislead consumers," declared European Commission Vice President Věra Jourová. The authorities' primary concern is whether Meta provided users with adequate and clear information regarding the payment system. In 2023, Meta introduced a choice for its users: either pay for an ad-free experience on Facebook and Instagram or agree to have their data used for personalized advertising. This "pay or consent" model is now under scrutiny for possibly deploying misleading or aggressive tactics to obtain user consent.
Consumer protection authorities are also worried that Meta may have pressured consumers into making rapid decisions about the two models. According to the European Commission, there is a fear that users might have rushed their choice out of concern that they would lose immediate access to their accounts and their network of contacts if they did not comply promptly.
The EU's Consumer Protection Cooperation (CPC) Network, a system designed for handling cross-border consumer protection cases, has formally notified Meta of these concerns. The company has been given until September 1, 2024, to respond and propose changes to its model or face potential fines. The CPC regulators initiated their investigation following complaints from consumer watchdog groups, who claim that Meta used confusing language to explain how both the paid and free versions of its platforms work. They also allege that the rollout of the new model pressured users to make quick decisions without sufficient time to consider the implications.
The CPC's investigation further contends that calling the ad-supported versions of Facebook and Instagram "free" is misleading. Despite not requiring a subscription fee, users must consent to the collection and use of their personal data for targeted ads, which the EU deems as not truly "free." Didier Reynders, EU Commissioner for Justice, emphasized that consumers should not be misled into thinking they will avoid ads if they pay for the service or that using their data for personalized ads does not constitute a cost.
"Subscriptions as an alternative to advertising are a well-established business model across many industries," stated Meta spokesperson Matt Pollard. "Subscription for no ads follows the direction of the highest court in Europe and we are confident it complies with European regulation."
The CPC accuses Meta of breaching its Unfair Commercial Practices Directive and Unfair Contract Terms Directive. If found guilty, Meta could face fines amounting to 4 percent of its annual revenue from the EU countries involved in the accusations.
This is not the first time Meta has faced regulatory scrutiny in Europe. The company has previously been hit with charges under the Digital Markets Act and record fines under the General Data Protection Regulation (GDPR) for transferring user data overseas. The ongoing investigation adds to the series of regulatory challenges Meta is encountering in Europe as it navigates the complex landscape of digital privacy and consumer protection laws.
