Is Facebook Actually Free? EU Challenges Meta Over Subscription Plans

Meta, the parent company of Facebook and Instagram, is under scrutiny from the European Union (EU) for its new "ad-free" subscription plans. These plans, which allow users to either pay a monthly fee or consent to data usage for personalized ads, have raised concerns with the EU's Consumer Protection Cooperation (CPC) Network. The CPC argues that Meta’s business model may violate EU consumer laws designed to protect users' rights.

Meta’s paid subscription plan, launched across the European Economic Area (EEA), EU, and Switzerland, offers users two options: pay €9.99 a month for an ad-free experience or continue using a "free" account by consenting to data usage. The CPC contends that labeling the service as "free" is misleading since Meta profits from the personal data of non-paying users. This practice, the CPC argues, breaches the EU’s Unfair Commercial Practices Directive and Unfair Contract Terms Directive.

The CPC has given Meta until September 1 to propose solutions or face substantial fines. This comes in the wake of a $1.3 billion fine Meta was ordered to pay the EU last May for a separate data privacy violation. Věra Jourová, VP of the European Commission for Values and Transparency, emphasized the importance of transparency and protecting consumers’ rights to make informed decisions. She described Meta’s practices as "sneaky," highlighting the EU’s commitment to strong consumer protection laws.

Additional concerns from the CPC include:

• The use of multiple hyperlinks in terms of service and privacy policies, which confuses users about how their data will be used.
• The imprecise language used by Meta, which glosses over important details, such as the fact that ad-free accounts wouldn’t prevent other users from sharing ad-related content.
• The pressure placed on users to quickly decide between a paid subscription and consenting to data usage before accessing their accounts.

The potential fines for Meta could be significant, up to 4 percent of annual revenue in each member state where they are found to have misled consumers. Given Meta’s earnings of over $30 billion in Europe last year, these penalties could be substantial.

Meta introduced the subscription plan to comply with EU regulations, arguing that offering subscriptions as an alternative to ads is a well-established and viable business model. The company insists that its new business model complies with EU laws. However, Meta must address the CPC’s concerns by September 1 to avoid facing extensive sanctions.