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EU follows up Apple charges with Meta ‘pay or consent’ case

EU is using introduction of Digital Markets Act to check the power of Big Tech

Margrethe Vestager, the bloc’s executive vice-president in charge of digital policy, said last week that she found it “surprising” that some of the world’s largest companies “do not take compliance as a badge of honour”. Photograph: Virginia Mayo/AP

Mon Jul 1 2024 - 16:38

The European Union (EU) has charged Facebook’s parent Meta with breaking the union’s landmark digital rules, only a week after it pressed a similar case against Apple.

The European Commission, the EU’s executive body, is exercising new powers granted by the Digital Markets Act (DMA) – legislation aimed at improving consumer choice and opening up markets for European start-ups to flourish. The tech giants had to comply from March this year.

In preliminary findings issued on Monday, Brussels regulators said they were worried about Meta’s “pay or consent” model. Facebook and Instagram users can currently opt to use the social networks for free while consenting to data collection, or pay not to have their data shared.

The regulators said that the choice presented by Meta’s model risks giving consumers a false alternative, with the financial barrier potentially forcing them to consent to their personal data being tracked for advertising purposes.

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Under the EU’s new digital rules, tech giants must gain consent from users “when they intend to combine or cross-use their personal data across different core platform services”, the EU said in March, when it opened compliance investigations against Meta and other Big Tech groups.

The EU executive said that Meta “users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalisation of advertising”.

Thierry Breton, the EU’s internal market commissioner, said: “Our preliminary view is that Meta’s “pay or consent” business model is in breach of the DMA.

“The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access.”

Meta said in a statement: “Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA [Digital Markets Act]. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”

If found in breach of the act, Meta faces hefty penalties of up to 10 per cent of its global turnover, and up to 20 per cent for any repeat offence. The EU’s preliminary findings have to be finalised within one year from the start of its official investigation in March.

Margrethe Vestager, the bloc’s executive vice-president in charge of digital policy, said last week that she found it “surprising” that some of the world’s largest companies “do not take compliance as a badge of honour”.

She said: “We are dealing with the biggest and most valuable companies on the planet. The DMA is not an excessive ask. [It] is plain vanilla to ask for a fair, open and contestable marketplace.”

Last Monday, the EU accused Apple of harming innovation on its App Store, the first time it had used its new powers against a tech giant.

Regulators said they were worried about restrictions the iPhone maker was imposing on developers’ ability to “freely steer their customers” by directing them to promotions outside its ecosystem. Apple has denied any wrongdoing.

The allegations against Meta this week would show Brussels was keen to be seen as moving quickly against alleged anticompetitive behaviour, analysts said.

“Big Tech is a priority for Brussels,” said an antitrust lawyer, who did not wish to be named. “There is an acknowledgment that the enforcement of traditional competition law has been slow and somewhat ineffective.” – Copyright The Financial Times Limited 2024

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