EU launches legal action against tech giant Meta

Days after launching legal action against Apple for alleged breaches of its digital rules, the European Union has charged Facebook's parent company, Meta, with similar possible violations of its Digital Markets Act, or DMA.

In a preliminary report issued on Monday, EU regulators who had been looking into Meta's compliance with the DMA said they were concerned about the company's "pay or consent" model of operating.

The model relates to Meta's Facebook and Instagram social apps, which allow users to use them for free as long as they consent to Meta collecting data about them, but that charge users who decline.

The DMA, which is policed by the European Commission, which is the EU's executive body, purports to be aimed at ensuring consumers have choice in software and hardware, and that massive companies are not able to enjoy an unfair advantage over European start-ups. The legislation, which was unveiled in November 2022, compels Big Tech companies not to treat third-party products and services less favorably than their own.

Regulators said Meta is essentially forcing people to consent to data collection by creating a financial incentive.

They said Meta "users who do not consent should still get access to an equivalent service which uses less of their personal data, in this case for the personalization of advertising".

The EU opened investigations into both Meta and Apple back in March. Both companies now have until March 2025 to mount their defense.

Last week, the bloc accused Apple of stifling innovation by making it difficult for developers to "freely steer their customers" toward their products through Apple's App Store.

The Financial Times quoted Thierry Breton, the EU's internal market commissioner, as saying: "Our preliminary view is that Meta's 'pay or consent' business model is in breach of the DMA. The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access."

Meta responded by issuing a statement in which it said: "Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close."

Companies found to be in breach of the DMA could face fines of up to 10 percent of their global turnover. Enterprises that commit a repeat offense could be fined up to 20 percent.

Analysts said Meta could be in line for a fine of as much as $14 billion and Apple could be looking at a fine of up to $38 billion if they are found guilty of the alleged violations.