EU preparing to charge Meta over ‘pay or okay’ model

The European Commission is ready to charge Facebook and Instagram parent company Meta over its ‘pay or okay’ revenue model.

Early 2023 the Data Protection Commission (DPC), Ireland’s data protection authority (DPA), imposed a 390 million euro fine on Meta for violating the GDPR. It was the DPA’s opinion that the Menlo Park-based tech company unlawfully collected user data for years.

Meta was using ‘contractual necessity’ as a legal base to justify the data collection. The DPC said that was not clearly outlined to users, which meant they didn’t know for what purposes their personal data was collected.

In order to prevent another multi-million euro penalty in the future, Meta decided to change the legal basis for collecting user data. Instead of ‘contractual necessity’ the company switched the legal basis in its Terms of Service and EU Privacy Policy to ‘legitimate interest’.

In the Summer of 2023, the Court of Justice of the European Union told Meta in a ruling that offering personalized ads on its platforms cannot be seen as a ‘legitimate interest’ for collecting user data.

That’s when Meta came up with a ‘pay or okay’ model. For a monthly fee users would be able to use Facebook and Instagram without their personal information being collected for personalized ads. The subscription model entered into force in November last year in the EU, Norway, Iceland, Liechtenstein and Switzerland.

‘Meta is offering users a false alternative’

Privacy organizations like Noyb protested against Meta’s ‘privacy fee’. They thought it was another attempt by Meta to circumvent EU privacy laws. Noyb also argued that if Meta was getting away with this, competitors would soon follow in its footsteps.

That’s when the European Commission intervened and launched an investigation into Meta’s ‘pay or okay’ model.

According to sources, the Commission is preparing to announce that Meta is breaking with the EU’s privacy rules.

The Financial Times says the Commission will present its preliminary findings later this week, arguing that Meta’s ‘pay or okay’ model presents users with a false alternative. In fact, it forces them to consent to their personal data being collected in order to deliver personalized ads.