To comply with the DMA Act, Meta said it will give its EU, EEA and Switzerland Instagram and Facebook users more choices on how they consume its services.
In the next few weeks, Facebook Messenger users can choose to link their accounts with Facebook or have separate accounts.
Facebook and Instagram users can also choose to menage their accounts separately or have them connected.
Users will also be able to choose if to share their Facebook account information with Meta’s Gaming and Marketplace services.
A group of 28 organisations including the privacy activist Max Schrems’ advocacy group NOYB, the Irish Council for Civil Liberties and Wikimedia Europe wrote to the European Data Protection Board (EDPB) opposing Meta’s paid no-ads subscription model.
The EDPB is expected to issue guidance on the subscription model in the coming weeks.
Eight consumer groups from Czech Republic, Denmark, France, Greece, Norway, Slovakia, Slovenia and Spain have asked the watchdogs to act against Meta for alllegedly breaching the privacy rules.
They have also criticised Meta’s new ad-free subscription model.
“The present request for information builds on Meta’s previous replies and asks additional information concerning the methodology underlying Meta’s risk assessment and mitigation measures reports, the protection of minors, elections and manipulated media”, the EU Commission said in a statement.
A U.S court ruled that Meta Platforms cannot stop FTC from reopening a probe into Facebook unit’s privacy practices for now.
Meta already paid a $5 billion fine in a 2020 privacy settlement but the FTC wants to tighten it to prevent profiting from minors’ data and expand curbs on facial recognition technology.
Meta said the regulator’s proposed changes would “curtail Meta’s development of new products, superintend Meta’s corporate governance, and impair Meta’s ability to serve its users and advertisers.”
36 members of the European parliament have asked Meta to scrap its “consent of pay” fee associated with its ad-free subscription model, saying its deosn’t conform with the GDPR principles.
The members are drawn from the progressive, left-leaning and center/center-left political parties.
Meta offers to reduce its montly subscription of Facebook and Instagram in the EU to 5.99 euros from 9.99, Reuters reported citing a Meta executive.
“We have wanted to accelerate that process for some time because we need to get to a steady state…so we have offered to drop the price from 9.99 to 5.99 for a single account and 4 euros for any additional accounts,” Meta lawyer Tim Lamb told a European Commission hearing.
The offer was made to the regulators earlier this year.
EU opens investigations into Meta and others for suspected non-compliance with the Digital Markets Act (DMA).
“The Commission is concerned that the binary choice imposed by Meta’s “pay or consent” model may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by gatekeepers,” the commission said in a statement.
The commission said it plans to conclude the investigations within 12 months.
“In case of an infringement, the Commission can impose fines up to 10% of the company’s total worldwide turnover. Such fines can go up to 20% in case of repeated infringement,” it added.
In response, Meta said its subscription model complies with the DMA, adding that its validity has been recognized by regulators in Germany, Denmark and France.
I=3, March 30, 32024
Meta lost an appeal case aimed at stopping the FTC from reopenning a privacy probe against Facebook as it pursues a legal suit against the agency.
Wow, both news stories today might be rather significant, in my opinion.
Can you remind me how binding or consequential the opinion of the EDPB is in this context and which further steps are expected now? Is this decision widely discussed by market participants on, e.g., Bloomberg or seen as irrelevant?
The European Commission said it’s investigating Meta Platforms for a potential violation of its Digital Services Act by failing to counter disinformation and deceptive advertisements.
“The suspected infringements cover Meta’s policies and practices relating to deceptive advertising and political content on its services. They also concern the non-availability of an effective third-party real-time civic discourse and election-monitoring tool ahead of the elections to the European Parliament, against the background of Meta’s deprecation of its real-time public insights tool CrowdTangle without an adequate replacement,” the statement reads.
Meta could be fined up to 6% of its global annual turnover if found to be in violation of the legislation.
The EU Commission has open a formal proceeding to assess whether Meta has breached the DSA in areas related to child safety.
“The Commission is concerned that the systems of both Facebook and Instagram, including their algorithms, may stimulate behavioural addictions in children, as well as create so-called ‘rabbit-hole effects’. In addition, the Commission is also concerned about age-assurance and verification methods put in place by Meta,” the Commission said in a statement.
The commission said they decided to open the probe based on an analysis of a risk assessment report sent by Meta in September 2023.
Infringement of the DSA rules could attract a penalty of up to 6% of the company’s annual global turnover.
Do you have any additional assessment which kind of realistic consequences this could have for Meta and how likely any penalty or change/ restriction of products is?
Given that the EU Commission is focused on cracking down on big tech wrongdoings and similar actions against Meta in United States, I would expect the findings to be skewed against Meta. However, I don’t expect drastic actions such as hefty fines or ban on its services since the Commission would be seen as stifling big tech. Also, there haven’t been any significant fines in the past. In February, TikTok was fined only 345 million euros over the way it processed children’s privacy data. Additionally, some experts believe Meta could have already documented its risk assessments and policies around the issue of child safety given it has been accused severally in the past. Another expert believes that proofing the wrongdoing could be hard.
"Considering the scrutiny that Meta has faced in recent years – especially in regard to childrens’ safety, it would be shocking if Meta has not adequately completed and documented their assessments and policies around the issues raised,” said Calli Schroeder, senior counsel and global privacy counsel at the Electronic Privacy Information Center (EPIC).
“I get the sense that the EU wants to be seen as a tough arbiter of digital safety and protections, and hence it will be looking to make some statement judgments as quickly as possible. However, I believe Meta has accounted for this kind of challenge,” says Bill Fisher, a principal analyst at eMarketer. “Its platforms were always likely to be some of the first in the crosshairs, so it likely has legal arguments in place and financial contingency to account for.”
“It is very difficult to prove that design itself is ‘addictive,’ even if minors, for whatever reason, get addicted. It is equally difficult to posit, from a regulatory perspective, that any other design would be less addictive or what such a concept could look like,” said Irina Tsukerman, a US national security lawyer and the president of Scarab Rising, a media and security consultancy.
I=6 Meta’s “Pay or Consent” doesn’t comply with DMA, EU preliminary findings say
Following the rejection of the European Data Protection Board, the EU Commission’s preliminary findings indicate that Meta’s “pay or consent” advertising model does not comply with the EU’s Digital Markets Act (DMA).
“In the Commission’s preliminary view, this binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta’s social networks,” the EU Commission said in a statement.
The commission said the next step is for Meta to exercise its rights of defence by examining the preliminary documents and reverting back to the commission.
If the commission’s preliminary findings are confirmed latest March 2025, a fine of up to 10% of Meta’s global turnover could be imposed.
In response, a Meta spokesperson told Reuters that the model complies with a EU top court ruling.
“Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” the spokesperson said.
Assessment
Though the EU Commission looks serious on reigning on big tech using the DMA, there have been views that the act could be difficult to enforce just like the GDPR which came into force in 2018. The GDPR has only imposed fines amounting to just over 4 billion euros, with Meta’s fine of 1.2 billion euros in 2023 being the highest. One can argue that GDPR fines (maximum of 4% of the firm’s global turnover) are less than that of DMA but a recent fine of 1.8 billion euros (under DMA) on Apple could point that the later could be as well be hard to enforce. Apple’s anticompetitive practices against music streaming services had received so much attention that a 1.8 billion euros look small. As such, I won’t expect Meta’s fine to exceed 2 billion euros. That’s supposing it would be fined.
Still, if Meta is fined by the EU Commission, it could challenge it in EU’s top court and if the model already complies with the court’s ruling as Meta says then it stands a great chance of winning.
The EU Commission is expected to impose a fine on Meta Platforms for tying its Marketplace with Facebook- giving it unfair advantage, people familiar with the matter told Reuters.
In December 2022, the Commission accused Meta Platforms of defying antitrust laws by tying the Marketplace with Facebook.
The fine could be 10% of Meta’s 2023 global turnover though the Commission’s fine is usually much lower.
Meta agrees to a $1.4 billion settlement (paid in installments) in Texas biometric law suit
Meta Platforms agreed to pay $1.4 billion to settle a Texas biometric data law suit.
The settlement will be paid over five year with the first installment of $500 million being paid within 30 days after the closure of the agreement and the remaining installments of $225 million each being paid in 2025 to 2028.