Meta's decision to give the EU users a choice to opt out of ads, and associated data tracking, in compliance with changing EU laws may cost it a pile of penalties.

Today, the EU Commission ruled that Meta's ad-free subscription plan does not comply with the Digital Markets Act (DMA), meant to hand over control over how their personal data is logged and utilized by social platforms to European social media users.

In the late fall of last year, Meta launched its ad-free subscription package in Europe: allowing its EU users to opt out of ads and tracking entirely, so long as they are willing to pay €9.99 a month. Conceptually, that would then avoid financial penalty in compliance with the new law: Meta could replace lost ad revenue by receiving direct payments from its users and provide that required option to avoid tracking data.

But privacy campaigners say that in reality, Meta's attempt is a watering down of the intent behind the GDPR, and its stand against "data capitalism", and with this, the European Data Protection Board issued an invitation for an investigation into the offering, and its compliance with the new laws.

Which has since discovered that Meta actually does violate the DMA. Which, if found to be correct, may indeed ensure the fine of up to 10% of the company's total worldwide turnover.

As stated by the EU Commission:
 

"The Commission takes the preliminary view that Meta's "pay or consent" advertising model is not compliant with the DMA as it does not meet the necessary requirements set out under Article 5(2). Particularly, Meta's model does not make possible users' option for a service that uses fewer of users' personal data but is otherwise equal to the "personalised ads" based service and it does not allow the users the right to freely consent to the combination of their personal data.

Something at stake, though is that Meta wants to charge people for access to its apps when the service isn't collecting data on them - that goes against the DMA rules as decided by the EU Commission where users should still get access to the same experience but not have to submit personal data.

Sounds unlikely to withstand a legal challenge.

The loss of business and impeding a company's ability to function under these new regulations all appear central themes. Meta's ad-free subscription offering does offer people the right to use its apps without submitting their info, but Meta will likely argue that it should not be financially penalized for that option. Which, by pulling more granular ad targeting out of the equation, it can argue it is, as it can't provide the same level of ad performance, which will see it losing ad partners.

The choice, then, is for Meta to charge through a subscription model, which, by the way, won't cover the amount it'll probably lose per user from ads.
In fact, Meta has already provided a lower-cost version of its ad-free subscription package to gain the approval of EU regulators, but the Commission is now set to compel Meta into a position of giving away income to comply with these rules.

I'm not sure that will hold up to scrutiny in court, but then again, the EU Commission has already sided with the challenge, which may not help Meta's cause.

At any rate, Meta's ad-free subscription offering could soon be history in EU, though I suspect that Meta might at least avoid penalties by claiming to have been acting in good faith to comply with these requirements.

But it might cost Zuck and Co. dearly. We shall see what happens next.