The EU says that Facebook and Instagram’s “pay or consent” ad strategy breaks the DMA.

The European Union has officially accused Meta of breaching the Digital Markets Act (DMA), the second accusation within a fortnight. According to a preliminary ruling by the European Commission, the advertising model of “pay or consent” introduced last year for Facebook and Instagram users violates Article 5(2) of the DMA as it does not offer users a third option that uses less data for ad targeting but remains free to use.

During their investigation, regulators discovered that Meta presents users with a “binary choice,” where they must either pay a monthly subscription fee for an ad-free experience on Facebook and Instagram or agree to the ad-supported version. The violation of rules by Meta, as stated, is the absence of a free version that “uses less personal data but is similar to the ‘personalized ads’ based service” and the denial of the right for users to freely consent to the combination of their data.

Margrethe Vestager, who heads the competition policy in the region, expressed that Meta’s advertising model does not comply with the Digital Markets Act. She emphasized empowering citizens to control their data and opt for a less personalized ad experience.

Meta spokesperson Matthew Pollard informed The Verge via email that the subscription model without ads aligns with the DMA and the direction set by the highest court in Europe. Meta is looking forward to engaging in constructive discussions with the European Commission to conclude the investigation.

The commission has told Meta of the charges and provided an opportunity to respond to the findings. If Meta is found guilty at the end of the investigation next year, the EU could impose a fine of up to 10 percent of its global revenue, potentially amounting to $13.4 billion based on its 2023 results. This penalty could increase to 20 percent if the company continues to violate the rules.

Meta became the second company to face charges following the full implementation of the DMA in March 2024. The commission declared recently that Apple’s App Store policies on “steering” hinder fair competition.