Consent within Meta’s Model Fails Under EU DMA

Meta Braces for EU Showdown Over User Data and Subscription Fees

Meta, the parent company of Facebook, Instagram, and WhatsApp, delivered a stark warning on Wednesday. People using its services in Europe might soon encounter a significantly worse situation across its platforms. This caution follows a pivotal regulatory judgement issued by officials in Brussels, representing the executive body of the European Union. The decision centres on Meta's data handling practices and its introduction of a subscription model, placing the tech giant squarely in the crosshairs of Europe's increasingly assertive digital rulebook. The potential consequences, Meta suggested, could considerably affect its European operations and income streams, possibly beginning later this year. This clash highlights the growing tension between the business models of major technology firms and the regulatory push for greater user control and privacy in the digital sphere.

The Contentious Choice: Consent or Pay Explained

At the heart of the dispute lies Meta's framework offering a choice between consent or payment, rolled out in November 2023 for users within the European Union. This system presents individuals with a clear binary decision. They can either agree to let Meta combine their personal data gathered from its main social network and its photo-sharing application for personalised advertising purposes, accessing the platforms free of charge. Alternatively, users can opt to remit a recurring charge for an ad-free version of the social networks. The subscription starts at around €5.99 (£5) per month in the EU, varying slightly depending on the access method (web or mobile). This model emerged as Meta's response to evolving EU regulations demanding clearer user consent for data processing, particularly the combination of data across different services. Meta maintains this approach provides a valid choice under EU law.

Brussels Draws a Line: The Digital Markets Act Violation

The EU's executive branch, however, reached a different conclusion. Last week, officials declared that Meta's system requiring consent or a fee fails to meet the stringent requirements of the Digital Markets Act (DMA). Specifically, the Commission points to Article 5(2) of the DMA. This article mandates that large online platforms, designated as "gatekeepers," must obtain genuine, freely given user permission before combining personal data across their core services or with third-party data. Crucially, the DMA stipulates that users who refuse consent must still be offered a less personalised but equivalent alternative service. The preliminary view from Brussels is that Meta's binary choice effectively forces acquiescence and does not provide this required equivalent alternative. Consequently, regulators levied a substantial €200 million (£171 million) fine against Meta, marking one of the first major penalties under the new DMA regime.

Meta Warns of Downgraded Experience

Reacting to the regulatory ruling and fine, Meta included pointed remarks in the company's latest financial report. The company acknowledged the feedback from Brussels concerning the DMA. It stated expectations of needing to implement modifications to its existing model to address the regulatory concerns. Meta explicitly warned that these necessary changes might precipitate a "notably poorer user interaction for people in Europe." Furthermore, the company anticipates substantial consequences for its European commercial activities and associated revenue streams. This suggests potential disruption to how Europeans interact with its primary social network and image platform if Meta alters its data practices or the subscription offering to meet the EU's demands. The potential shift underscores the financial stakes involved as Meta navigates the complex European regulatory environment.

Ripple Effects: Timelines and Appeals

Meta indicated the potential negative effects on user experience and its European business could materialise relatively soon. The company pinpointed the July-September period this year as a possible starting point for these impacts. These conditions could persist during the company's appeal process against the judgement from EU regulators and the accompanying fine. The company has been given a standard timeframe, reportedly 60 days from the decision, to adhere to the DMA's determination or face the possibility of further financial penalties. Meta is expected to challenge the decision, arguing its subscription model, particularly versions introduced after November 2024 offering more choice, aligns with EU regulations like the GDPR and the ePrivacy Directive. The appeal process adds another layer of uncertainty to the situation's evolution.

Image Credit - BBC

Across the Channel: The UK Watches and Waits

Notably, the modifications Meta anticipates for its EU operations would not currently affect individuals residing in the United Kingdom. The company has not rolled out its advertisement-free payment option there. However, the company confirmed it is actively exploring this possibility. Discussions are underway involving Britain's data regulator, the Information Commissioner's Office (ICO).

These conversations focus on designing a comparable structure requiring payment or consent tailored for British users and ensuring it meets UK data protection laws, including GDPR principles retained post-Brexit. A representative for the tech firm stated that discussions with the ICO aim to fulfil supervisory requirements and simultaneously uphold the governmental objective for rules to encourage expansion. Meta highlights that targeted marketing across its services yields more than £19.5 billion each year for enterprises in Britain, framing the debate partly in economic terms. The ICO confirmed it is examining the issue and will state its position later this year.

Data Dilemmas: The Core of the Conflict

The fundamental disagreement centres on the nature of consent. Officials in Brussels contend Meta's choice system prevents users from giving genuinely free permission regarding the use of their personal data, as mandated by both the DMA and the underlying principles of the General Data Protection Regulation (GDPR). The DMA requires consent to be freely given, specific, informed, and unambiguous, and asserts that access to a service cannot be conditional on permission unless data processing is essential for the service itself.

Brussels argues the choice between paying a fee or allowing extensive data combination is inherently coercive. Meta, conversely, likely argues the subscription offers a valid, non-tracking alternative, aligning with a common business model. Regulators are also assessing a newer alternative Meta introduced, which supposedly employs diminished amounts of user information for ads. Consumer groups like BEUC argue even Meta's newer models employ misleading practices and interface designs that steer users towards consenting, undermining free choice.

A Broader Regulatory Net: DMA and Beyond

The action against Meta is not occurring in isolation. It represents a key enforcement step under the EU's Digital Markets Act, a sweeping piece of legislation designed to ensure fairer and more open digital markets by imposing specific obligations on dominant tech platforms ("gatekeepers"). The DMA aims to prevent gatekeepers from leveraging their market power unfairly, promoting competition and innovation from smaller players. Alongside the fine against Meta, the EU's executive recently imposed an even larger €500 million penalty on Apple for breaching DMA rules related to how it operates its App Store, specifically restricting developers from informing users about cheaper offers outside the App Store ("anti-steering"). These actions signal the serious intent from Brussels to enforce the DMA and reshape the behaviour of Big Tech operating within the EU. The regulation reflects a broader European push for "digital sovereignty".

Privacy Versus Personalisation: The User Perspective

The regulatory battle highlights a persistent tension for users: the trade-off between accessing "free" online services funded by personalised advertising and maintaining greater control over personal data. Meta's pay-or-consent framework brings this choice into sharp focus. While Meta argues personalised ads underpin a free internet, privacy advocates and regulators express concerns about the scale of data collection by gatekeepers and its impact on competition and individual autonomy. Some analysts, like Eric Seufert, who analyses the industry for Mobile Dev Memo, suggest Meta might strategically leverage potential user frustration over a degraded service. The theory posits Meta could try turning users into advocates against stringent regulations by demonstrating how these rules negatively affect the products they use. Public reaction to Meta's increasing AI integration, like the Meta AI conversational agent appearing in WhatsApp and Instagram, has already sparked some user annoyance and concerns about authenticity and forced adoption.

Meta's Financial Health and AI Ambitions

Despite the regulatory headwinds in Europe, Meta's overall business performance remains strong. The company's recent earnings announcement, coinciding with the EU warning, exceeded the forecasts from financial analysts. The results demonstrated continued substantial income from ads, with total revenue up 16% year-over-year to $42.31 billion in the first quarter of 2025. Ad impressions across its platforms increased 5%, while the average price per ad rose 10%. Meta also highlighted substantial user growth, with Family daily active people reaching 3.43 billion, a 6% year-over-year increase. Alongside strong financials, Meta heavily promoted its advancements regarding artificial intelligence. Mark Zuckerberg, Meta's originator and chief executive, noted progress concerning AI eyewear plus the Meta AI system, claiming the latter has a user base nearing one billion people each month. Analysts observe Meta is investing heavily ("full throttle") in AI, seeing it as crucial for future growth.

Image Credit - NOYB

Under Scrutiny: Antitrust Challenges Mount

Beyond the European regulatory challenges, Meta faces significant antitrust scrutiny domestically. The corporation is presently involved in a significant court case, refuting accusations from the US Federal Trade Commission (FTC). The FTC lawsuit, initiated in 2020, contends that Meta achieved and maintains an illegal monopoly in the "personal social networking services" market. Central to the FTC's case are Meta's acquisitions of potential competitors: the image platform in 2012 and the messaging service in 2014. The agency argues these purchases were anticompetitive actions designed to eliminate threats and solidify Meta's dominance. The FTC seeks remedies that could include forcing Meta to divest both Instagram and WhatsApp, potentially breaking up the company. Meta counters that these acquisitions, previously cleared by the FTC, have benefitted consumers and competition. The trial began in April 2025 and is expected to continue for several months.

The Path Forward: Compliance or Confrontation?

Meta finds itself navigating a complex and "dynamic supervisory environment," mentioned in its financial update. In Europe, the company must decide how to respond to the DMA ruling from Brussels. Options include modifying its structure requiring payment or consent to offer a truly equivalent free alternative without extensive data combination, fully complying with the decision, or continuing its appeal process while potentially facing further penalties. The company has introduced a newer option allowing users choosing the 'free' version to select 'less personalised ads,' which regulators are still assessing. Meta's public statements suggest strong disagreement with the EU's stance, framing it as unfairly targeting successful American businesses. However, non-compliance with the DMA carries the risk of substantial fines, potentially up to 10% of global annual turnover for repeated infringements, and even structural remedies like divestiture in cases of systematic non-compliance.

AI Integration and User Reception

Parallel to the regulatory battles, Meta continues its aggressive push into artificial intelligence across its platforms. The rollout of Meta AI features, including chatbots integrated into WhatsApp search bars, AI-suggested comments on Instagram, and AI-powered image editing tools, aims to embed the technology deeply into the user experience. Chief Executive Mark Zuckerberg highlighted Meta AI reaching a user base nearing one billion people each month as a sign of progress. However, this integration has not been universally welcomed.

Some users have expressed frustration with the inability to remove the AI conversational agent from WhatsApp and Instagram search functions, perceiving it as forced adoption. Concerns also exist about AI-generated comments potentially flooding platforms with inauthentic engagement, potentially misleading advertisers and devaluing genuine interaction. Meta defends the tools as optional enhancements and pledges to consider input from individuals, but the rollout strategy highlights the challenges of balancing innovation with user acceptance and control.

The Bigger Picture: Gatekeepers and Fair Play

The actions against Meta and Apple under the DMA underscore a fundamental shift in how Europe intends to regulate the digital economy. The legislation specifically targets "gatekeepers" – large platforms deemed to have significant and entrenched market power. The DMA imposes proactive obligations ("dos and don'ts") intended to prevent these powerful companies from setting unfair terms, stifling competitors, or locking in users. Key principles include preventing self-preferencing, requiring data sharing with business users, ensuring interoperability between services, and demanding explicit permission for data combination and tracking. The goal is to foster a more competitive environment where smaller businesses and startups have a fairer chance to innovate and grow, ultimately providing consumers with more choice and better services at fairer prices. Critics, however, argue the DMA could stifle innovation and disproportionately targets successful US companies.

Economic Arguments and Future Business Models

Meta's defence against regulatory action often includes economic arguments. The company stresses that personalised advertising, fuelled by user data, allows platforms like its primary social network and its picture-sharing app to remain free for billions of users worldwide. It points to the significant revenue generated for businesses, particularly small and medium-sized enterprises, through targeted ads (£19.5bn within the UK alone). The dual option framework, from this perspective, represents an attempt to offer a privacy-preserving alternative while maintaining a viable business structure. However, the EU's stance suggests that the fundamental right to data protection and free consent cannot be simply traded for access to a service. The ongoing disputes may force Meta and other ad-dependent tech giants to further explore alternative revenue streams and business models, potentially accelerating shifts towards subscriptions or other forms of monetisation, even if user uptake for paid options has reportedly been limited so far.

Conclusion: A Defining Moment for Digital Regulation

The confrontation between Meta and regulators in Brussels over the structure requiring consent or payment represents a critical juncture in digital regulation. The EU, armed with the DMA, is demonstrating its resolve to enforce stricter rules on how dominant tech platforms operate, particularly concerning user data and permission. Meta's warning of a potentially degraded user experience in Europe highlights the real-world consequences as business models clash with regulatory demands. The outcome of this dispute, including Meta's compliance efforts and potential appeals, alongside parallel actions against companies like Apple and ongoing antitrust cases within the United States, will significantly shape the future landscape for Big Tech. It raises fundamental questions about the balance between innovation, user privacy, free access, and fair competition in the increasingly regulated digital age. The decisions made now will likely reverberate globally, influencing how technology platforms interact with users and regulators worldwide for years to come.