Brussels, Belgium — European Union antitrust regulators have escalated their scrutiny of Meta Platforms, formally opening a detailed investigation into the company’s implementation of the landmark Digital Markets Act (DMA).
The probe focuses specifically on Meta’s response to the DMA’s requirements regarding user choice, particularly its recently introduced subscription model across its platforms, including Facebook and Instagram. This ‘Pay or Consent’ option allows users to pay a monthly fee to use the services without personalized advertising, or consent to data tracking for targeted ads under the free tier.
Examining the ‘Choice’ Offered
The European Commission, the EU’s executive arm and chief antitrust enforcer, announced the formal proceedings following preliminary market testing and analysis. The core question under investigation is whether Meta’s subscription alternatives genuinely offer users a free and fair choice that aligns with the DMA’s objectives of promoting competition and user control, or if they create new barriers and exploit Meta’s significant market power.
Regulators are concerned that the design of the subscription model might coerce users into opting for the ad-supported, data-tracking version, potentially undermining the DMA’s aim to empower users with meaningful control over their data and access to services.
The Digital Markets Act Context
The DMA, which came into full effect in March 2024, designates large online platforms like Meta as ‘gatekeepers’ due to their significant influence and control over key digital services. The act imposes a strict list of dos and don’ts on these gatekeepers, designed to curb anti-competitive practices and create a fairer digital ecosystem.
Key obligations include prohibiting the self-preferencing of a gatekeeper’s own services, ensuring interoperability, and crucially, granting users more control over their data and the ability to easily switch between services or uninstall pre-installed software.
Meta’s subscription model was introduced across the European Economic Area (EEA) in November 2023, ahead of the DMA’s full application, as a mechanism the company presented as offering users a choice in response to evolving EU regulations on digital services and privacy.
Scope of the Investigation
The Commission’s formal investigation will delve into several specific aspects of Meta’s implementation:
Firstly, it will assess whether the choice offered to users (paying for no ads vs. consenting to personalized ads) is truly balanced and not skewed by the design or presentation of the options. Regulators will examine if the process is confusing, burdensome, or framed in a way that pushes users towards one particular outcome.
Secondly, the probe will evaluate the size and structure of the fee charged for the ad-free version. While the DMA doesn’t directly regulate pricing, the investigation will consider if the cost is set at a level that might effectively act as a deterrent, making the ‘free’ ad-supported option the only practical choice for the vast majority of users.
Thirdly, the investigation will look at whether Meta’s approach maintains the overall goals of the DMA, particularly concerning fairness, competition, and user empowerment, or if it introduces new forms of friction or leverage.
This formal probe follows previous signals from Brussels regarding Meta’s compliance efforts. EU officials had already voiced concerns about the design of Meta’s consent banners and user interfaces, suggesting they might not be fully transparent or conducive to genuinely free user choices.
Potential Outcomes and Implications
The opening of a formal investigation signifies a serious phase of scrutiny. It grants the Commission powers to conduct inspections, send requests for information, and interview company officials and relevant stakeholders. There is no fixed legal deadline for concluding a formal DMA investigation, but these probes are typically concluded within 12 months.
If the Commission finds that Meta’s practices infringe the DMA, it can impose significant penalties. Non-compliance can lead to fines of up to 10% of a company’s total worldwide annual turnover, and up to 20% for repeat infringements. Beyond fines, the Commission can also order behavioral or structural remedies to ensure compliance, potentially forcing Meta to alter the design or pricing of its subscription offering.
This investigation is being closely watched by other major tech companies designated as gatekeepers under the DMA, including Alphabet (Google), Apple, Amazon, Microsoft, and ByteDance (TikTok). The outcome will likely set a precedent for how these companies can or cannot structure user choices, particularly concerning the intersection of personalized advertising and paid alternatives, in response to European digital regulations.
The move underscores the EU’s determination to rigorously enforce the DMA and ensure that large digital platforms genuinely adapt their business models to the new regulatory landscape, rather than finding workarounds that perpetuate existing market dynamics or create new hurdles for users and competitors.
Meta has previously stated that its subscription model was designed to comply with evolving EU rules. The company is expected to cooperate fully with the European Commission’s investigation as it seeks to demonstrate that its implementation meets the DMA’s requirements for offering users meaningful choice.
