Meta given weeks to tell EU consumer protection authorities how it'll fix 'pay or consent'

Meta has been given until September 1 to respond to consumer protection concerns in the European Union.

The Consumer Protection Cooperation (CPC) Network, a network of authorities responsible for the enforcement of EU consumer protection laws, is concerned about a binary choice Meta has forced on regional users of Facebook and Instagram since last November. It required that users accept being tracked and profiled for behavioral ad targeting in order to continue to access its services for free or else they must pay Meta monthly subscriptions to access versions of the services it claims are free of ads.

Meta’s controversial “pay or consent” model has landed the company on multiple regulators’ radars: It’s already under investigation by the European Commission as it suspects Meta is breaching the bloc’s Digital Markets Act (DMA). The EU has also sought more information from Meta about “pay or consent” model’s compliance with the DMA’s sister regulation, the Digital Services Act.

Additionally, Meta’s pay or consent choice remains under review by data protection authorities, including Ireland’s Data Protection Commission (DPC), which oversees its compliance with the bloc’s General Data Protection Regulation (GDPR).

Now, the mechanism is subject to coordinated action by the CPC network, which has been investigating the binary choice Meta’s imposed on EU users since a flurry of complaints were filed last year.

“Meta has until September 1, 2024 to reply to the letter of the CPC network and the Commission and to propose solutions. If Meta does not take the necessary steps to solve the concerns raised, CPC authorities can decide to take enforcement measures, including sanctions,” warned the Commission Monday.

Consumer protection authorities involved in the coordinated action believe several elements of Meta’s consent mechanism could constitute “misleading or aggressive practices,” per a Commission press release — whereas the EU’s legal standard requires consumers to be provided with “upfront with true, clear and sufficient information.”

Their analysis casts doubt on whether the information provided by Meta allows consumers to understand the implications of a decision to pay or to accept tracking on their consumer rights.

The CPC authorities, which are being led in this Commission-coordinated action by the French directorate general for Competition, Consumer Affairs and Fraud Prevention, are also concerned EU consumers may have been exposed to undue pressure to choose rapidly between the two models — i.e. fearing they would instantly lose access to their accounts and their network of contacts.

Misleading

In particular the network highlights concern over Meta’s use of the word “free” in the information it presents users when they are asked to make a choice to either consent or pay. The CPC suspects this could be misleading since Meta requires consumers to accept it can make revenue from using their personal data to show them personalized ads if they choose not to pay for the ad-free versions of the services.

They also take issue with other aspects of Meta’s use of language, accusing it of using imprecise terms, such as “your info” to refer to consumers’ personal data; and suggesting that consumers who pay will not see any ads. The CPC says they assert users might still see ads when engaging with content shared via Facebook or Instagram by other members of the platforms.

The CPC network further accuses Meta of confusing users by requiring them to navigate through different screens in the Facebook/Instagram app or web-version and click on hyperlinks directing them to different parts of the Terms of Service or Privacy Policy in order to find out how their preferences, personal data and user-generated data will be used by Meta to show them personalized ads.

Another issue they have raised in their letter to Meta is the level of pressure it is applying to consumers who have always used its social networking services free of charge until it introduced the “pay or consent” model — and who are suddenly unable to access their accounts until they make a choice.

The CPC argues this does not give consumers pre-warning, sufficient time or a real opportunity to assess how the choice may affect their contractual relationship with Meta.

Almost 20 consumer organizations banded together to file the original consumer protection complaints with the CPC Network last November. Eight consumer groups subsequently also filed privacy complaints against Meta’s consent or pay model in February, arguing it’s breaching the GDPR too.

Responding to the CPC action, Meta spokesman Matthew Pollard emailed a brief statement and referenced a ruling by the EU’s top court from last summer which concerns a separate competition challenge. “Subscriptions as an alternative to advertising are a well-established business model across many industries. Subscription for no ads follows the direction of the highest court in Europe and we are confident it complies with European regulation,” the company claims.

Despite so much regulatory attention on Meta’s “pay or consent” choice in the EU, it’s notable the company is sticking to its guns for now. However, years of glacial GDPR enforcement against earlier Meta business model choices — that were later confirmed to be in breach of EU law — looks to have accustomed it to deploying a strategy of buying time.

The CPC network is not the Irish DPC, though. And the Commission is directly involved in facilitating dialog to get movement on issues of consumer protection concern so it will be interesting to see whether there is any change of heart from Meta on “pay or consent” come fall.

While the CPC network itself cannot impose fines or sanctions itself, if remedies for concerns it’s raising are not forthcoming through the outreach and engagement process then national consumer protection authorities can pursue enforcement in their respective Member States — where they are empowered to impose penalties of up to 4% of global annual turnover. Given how many EU consumer authorities have raised concerns about Meta’s “pay or consent” model, then enforcement action on the issue could get expensive.