Meta can’t say Facebook and Instagram are ‘free’

Meta is misleading Facebook and Instagram users by using the term ‘free’ when describing its ‘pay or okay’ business model.

In November 2023, Meta came up with its ‘pay or okay’ model. Facebook and Instagram users either choose to pay a monthly subscription fee and see no ads on their timeline, or they opt in for a ‘free’ account, which means Meta can collect user data in order to provide personalized ads.

Reason for this new business model is that the company collected user data for years, using a ‘contractual necessity’ as a legal basis. The Irish Data Protection Commission (DPC) argued that users didn’t know Meta was collecting their personal information. The data protection authority (DPA) therefore convicted Meta for these practices and the company had to pay a 390 million euro fine.

Then Meta tried to justify its data collection practices by using ‘legitimate interest’ as a legal basis. Again Meta received a slap on the wrist. The Court of Justice of the European Union ruled that offering personalized ads on its platforms cannot be seen as a legitimate interest for collecting user data.

Around the time Meta implemented its ‘pay or okay’ business model, the Consumer Protection Cooperation Network (CPC) launched an investigation into Meta's new subscription model.

The consumer protection authorities have rounded up their examination. They come to the conclusion that Meta’s new business model raises concerns and could potentially be considered unfair.

The CPC says Meta is misleading consumers by using the word ‘free’. Users who choose the ‘free’ version must accept that Meta monetizes the use of their personal data by showing personalized advertisements.

According to the supervisors, information about how Meta handles user data is difficult to find on the website and in the apps of Facebook and Instagram. Furthermore, the consumer protection authorities criticize the concealing language. For example, ‘your info’ refers to consumers’ ‘personal data’. The company also suggests that consumers with a paid subscription will not see any ads at all, which isn’t the case.

“Consumers must not be lured into believing that they would either pay and not be shown any ads anymore, or receive a service for free, when, instead, they would agree that the company used their personal data to make revenue with ads. EU consumer protection law is clear in this respect. Traders must inform consumers upfront and in a fully transparent manner on how they use their personal data. This is a fundamental right that we will protect,” Didier Reynders, Commissioner for Justice, says in a statement.

Meta has until September 1 to reply to the letter of the CPC Network and the European Commission and to come up with solutions. If Meta does not take the necessary steps to solve the concerns raised, CPC authorities can decide to take enforcement measures, including sanctions.