Meta has issued a warning that European users might soon face a “materially worse” experience on its platforms. This comes after the European Commission ruled that Meta’s “consent or pay” model violates the Digital Markets Acts (DMA). The company was fined €200 million and now must adjust its approach, which could impact user experience and revenue in Europe.
The “consent or pay” model requires users to either pay a monthly subscription for an ad-free experience or allow Meta to use their data for personalized ads. The EU argues this does not give users true freedom of choice. Meta says changes to comply with regulations could degrade the platform’s functionality and hurt its European business. These changes may take effect by the third quarter of 2024 while Meta appeals the decision.
Unlike in the EU, UK users are not yet subject to this model. Meta is in talks with the UK’s Information Commissioner’s Office (ICO) to determine how a similar system might work there. The company emphasizes that personalized ads generate over £19.5 billion annually for UK businesses, suggesting any restrictions could have broader economics effects.
Analysts speculate that Meta may be trying to turn public opinion against strict regulations by highlighting potential service downgrades. Eric Seufert, an industry expert, suggests Meta wants users to push back against rules that limit data usage for ads. Meanwhile, the EU is reviewing an alternative ad model from Meta that uses less personal data.
Despite regulatory challenges, Meta’s latest earnings report shows strong performance, with significant growth in ad revenue and AI investments. CEO Mark Zuckerberg highlighted nearly 1 billion monthly active users for Meta AI, though its rollout in Europe faced backlash from WhatsApp users who dislike the non-removable chatbot.
The company also faces legal battles in the U.S., where the Federal Trade Commission accuses Meta of monopolistic practices through its acquisitions of Instagram and WhatsApp. With ongoing regulatory scrutiny worldwide, Meta’s future strategies will likely balance compliance with business growth.
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