Instagram’s ‘pay-or-opt-in’ model violates DMA, says EU: Billion-dollar fine on the way?

Halfthe owner of Facebook and Instagram, has been formally accused by the European Union of violating the Digital Markets Act (DMA) with its advertising model.

According to the European Commission, the “pay or agree” model launched last year by Meta for Facebook and Instagram does not comply with Article 5(2) of the DMA, as it does not offer users a third option that uses less data for ad targeting while remaining free.

The “pay or opt-in” model offers no real choice to users

The investigation found that Meta offers users a “binary choice”: pay a monthly subscription for the ad-free version of Facebook and Instagram or opt-in to the data-supported ad version. The DMA violation, according to the EU, is by not allowing users to opt-in to a free version that uses less personal data but is otherwise equivalent to the “personalized ads” service and by not allowing them to “exercise their right to freely consent to the combination of their personal data.”

Margrethe Vestager, head of EU competition policy, said: “Our preliminary view is that Meta’s advertising model is not compliant with the Digital Markets Act. We want to give citizens the opportunity to take control of their data and choose a less personalized advertising experience.”

Meta denied the allegations, saying the ad-free subscription follows the direction of the European Court of Justice and complies with the DMA. The company said it was ready for further constructive dialogue with the European Commission to conclude the investigation. The Commission informed Meta of the allegations and gave it an opportunity to respond. If Meta is found guilty at the end of the investigation, the EU could fine it up to 10% of its total global revenue, which for Meta could amount to $13.4 billion based on 2023 results. The fine could increase to 20% if the company continues to violate the DMA.

This is the second such accusation in a few weeks, after the one against Apple for the App Store policies. What do you think about this accusation from the EU against Meta? Do you think the “pay or opt-in” model violates your rights? Share your thoughts in the comments!