EU threatens to fine Meta for saying Facebook is ‘free’

The European Union says it has notified Meta that its “pay or consent” model for Facebook and Instagram might violate consumer protection laws. The EU’s Consumer Protection Cooperation (CPC) Network says the company has until September 1st, 2024, to propose changes to its model, which it calls “misleading” and “confusing” for users, or face potential fines.

Meta’s “pay or consent” model, which was introduced last year, gives users a choice: pay as much as €12.99 per month to use Facebook and Instagram without ads or consent to letting the company collect and use personal data to serve personalized ads. The EU doesn’t like what it sees as privacy-violating data usage and has already hit Meta separately with Digital Markets Act charges over its model and record fines under the GDPR for transferring user data overseas.

CPC regulators, who began their investigation after complaints from consumer watchdog groups, claim the company uses confusing language to explain how both the paid and “free” versions of Facebook and Instagram work and that its rollout pressured people to make a choice without enough time to consider how it would affect them. They also say that calling the ad-free versions of Facebook and Instagram “free” is misleading since it still requires users to consent to the use of their data for targeted ads.

Didier Reynders, EU Commissioner for Justice, says customers shouldn’t be “lured into” thinking they won’t see ads if they pay the subscription, or that it’s free despite the company profiting from their personal data. Companies must be transparent upfront about how they use user data, he added.

“Subscriptions as an alternative to advertising are a well-established business model across many industries,” Meta spokesperson Matt Pollard told The Verge in an email, “Subscription for no ads follows the direction of the highest court in Europe and we are confident it complies with European regulation.”

The CPC accuses Meta of breaching its Unfair Commercial Practices Directive and Unfair Contract Terms Directive. Fines for those could be as much as 4 percent of the company’s annual revenue for the EU countries it’s accused in.