Meta Risks EU Penalties for Pay-or-Consent Model

Meta Platforms faces renewed scrutiny from the European Commission over its “pay-or-consent” advertising model, which requires users in the EU to either accept personalized advertising or pay a monthly subscription starting at €9.99 for an ad-free experience. The Commission contends this model breaches the Digital Markets Act (DMA) by failing to offer a genuine alternative that uses only minimal personal data, as mandated under the regulation. Meta’s attempt to address these concerns by reducing the amount of data used for targeted ads in late 2024 has not convinced regulators.

The DMA empowers the EU to fine companies up to 5 percent of their average daily global turnover for non-compliance. With Meta’s 2024 revenue at approximately €151 billion, this could result in daily fines of up to €21 million, potentially exceeding €140 million per week. Though such maximum penalties are rarely imposed, the Commission has signaled its willingness to escalate enforcement if Meta does not comply.

Meta has publicly criticized the Commission’s approach, arguing that the “pay-or-consent” model is an established business practice permitted for other companies in Europe. The company accuses the EU of unfairly targeting American firms and shifting compliance expectations during negotiations. This dispute forms part of a broader tension between US tech giants and European regulators, who are increasingly assertive in enforcing digital competition and privacy rules.

The EU’s actions against Meta follow similar enforcement against Apple, which recently modified its App Store terms in the EU and now charges third-party developers a commission between 2 and 13 percent, down from the traditional 30 percent. The Commission continues to consult with stakeholders, including major app developers, to assess compliance with the DMA and signals a new era of rigorous oversight for digital gatekeepers operating in the European market.