In April, the European Commission declared that Meta's approach in Europe—offering users a choice between an ad-free subscription and a free, ad-supported service—violates the Digital Markets Act (DMA). Meta has announced its intention to appeal this decision.
The DMA introduces rules for "Gatekeeper" companies like Meta, which include obtaining GDPR consent for DMA-specific personal data use in ads. On July 4, 2023, the Grand Chamber of the European Court of Justice ruled that dominant companies could secure valid consent by offering users a choice between subscription-based and free ad-supported services. However, according to Meta, the Commission disregarded this ruling by concluding that Meta's user choice does not align with the DMA.
Meta argues that other national courts and data protection authorities in countries such as France, Denmark, and Germany have supported business models providing paid subscription alternatives to personal data consent for personalized ads. The company contends that it is unfairly restricted from offering both subscription-based and free ad-supported services in Europe.
Additionally, the Commission requires Meta to offer less personalized ads for free. This decision overlooks what Meta describes as commercial realities where fair compensation is necessary for sustaining innovation. According to Meta, similar expectations are not imposed on telecom or broadband providers despite their essential nature.
Meta highlights the economic impact of its personalized advertising services across Europe. Despite evidence linking these services to significant economic activity and job creation within the EU in 2024, they argue that the demand for less personalized ads negatively impacts user experience and advertiser returns.
Early feedback on Less Personalized Ads (LPA) shows increased user dissatisfaction due to irrelevant or repetitive content. SMEs relying on direct response advertising reportedly face reduced effectiveness with LPA compared to personalized ads.
Meta claims these changes undermine DMA goals by creating uncertainty and hindering new entrants' monetization abilities while degrading user experiences.
Finally, Meta expresses concerns over regulatory dialogue with the Commission. Despite significant investments toward compliance and ongoing engagement efforts since before any investigation began, they report inconsistent feedback from regulators.
They call upon key stakeholders—including industry players and regulators—to demonstrate meaningful regulatory dialogue aimed at achieving better regulation aligned with DMA objectives benefiting European consumers and businesses alike.