Meta faces threat of daily fines from EU over 'Pay or Consent' model

New Delhi: Meta Platforms, the parent company of Facebook and Instagram, is under renewed scrutiny from the European Union, with regulators warning of potential daily fines if its revised "pay-or-consent" advertising model fails to comply with the Digital Markets Act (DMA). 

The European Commission, the EU’s competition enforcer, issued the warning on June 27, 2025, following a €200 million ($234 million) fine levied in April for earlier violations of the DMA, which aims to curb big tech’s market dominance and ensure fair competition.

The contentious "pay-or-consent" model, introduced in November 2023, offers EU users of Facebook and Instagram two options: use the platforms for free while consenting to data tracking for personalised ads or pay a monthly subscription (starting at €9.99) for an ad-free experience. 

The European Commission has argued that this binary choice violates the DMA by failing to provide a "less personalised but equivalent alternative" that uses minimal personal data, as required under Article 5(2) of the regulation. 

Despite Meta’s adjustments in November 2024 to reduce data usage for targeted ads, the Commission remains unconvinced that these changes meet compliance standards.

The EU’s warning signals a tougher stance on enforcement, with daily fines of up to 5% of Meta’s average daily global turnover, potentially hundreds of millions of dollars, looming if the company does not address the concerns by the specified deadline. 

Meta has pushed back, accusing the EU of discriminatory treatment and “moving the goalposts” during compliance discussions. A Meta spokesperson argued that the model aligns with EU law, stating, “A user choice between a subscription for a no-ads service or a free ad-supported service remains a legitimate business model for every company in Europe—except Meta.” 

The company also contends that its revised model, which offers a less personalised ad option, was developed in collaboration with European data protection authorities and complies with both the DMA and GDPR (General Data Protection Regulation).

This clash comes amid heightened tensions between the EU and US tech giants, with the European Commission also fining Apple €500 million ($570 million) for DMA violations in April. Meta’s Chief Global Affairs Officer, Joel Kaplan, framed the fines as a “multi-billion-dollar tariff” that disadvantages American companies while favouring European and Chinese competitors, potentially escalating transatlantic trade disputes.