The European Union (EU) has provisionally concluded that Meta Platforms, the parent company of Facebook, violated the Digital Markets Act (DMA), which aims to prevent 'big tech (large information technology companies) abuse.' It is expected that fines of up to several billion euros annually could be imposed.
On the 1st (local time), the European Commission announced that its preliminary investigation under the DMA found that Meta's 'pay or consent' model for Facebook and Instagram violates the DMA. Accordingly, the European Commission plans to officially notify Meta of these preliminary findings as early as this week.
The problematic model is based on Meta's own policy that users must consent to data collection for advertising purposes if they do not want to pay a minimum monthly fee of 10 euros. Previously, ahead of the DMA enforcement, the EU decided to prohibit big tech companies designated as 'gatekeepers' from collecting and using user data without consent. In response, Meta introduced 'ad-free plans' or 'subscription payment' plans for Facebook and Instagram users in Europe in November last year.
The Commission pointed out that "users who refuse to consent to personal data collection must be provided with an equivalent alternative," and that "(Meta's model) does not allow the free exercise of the right to consent."
The EU plans to finalize the level of sanctions by March 25 next year after considering Meta's explanations and rebuttals. Violations of the DMA can result in fines of up to 10% of global revenue. If deemed a repeated violation, fines can reach up to 20%.
This is the second time the EU has sanctioned a big tech company for DMA violations, with Meta being the second. Previously, the EU provisionally concluded that Apple's App Store operations violated the DMA and notified the company. Apple is also expected to face fines from the EU around the same time as Meta.
Meta stated in a press release that the "'pay or consent' model complies with the EU Court of Justice precedents and DMA provisions," and expressed hope for "constructive dialogue with the European Commission."
The DMA is a law that designates certain large platform operators as 'gatekeepers' to prevent abuse of market dominance and imposes special regulations. The gatekeepers include seven companies: Alphabet (Google's parent company), ByteDance (TikTok's parent company), Amazon, Apple, Meta, Microsoft (MS), and Booking.com.
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