The European Union announced that it fined Apple and Meta €500 million ($568 million) and €200 million ($227 million), respectively after it found that Apple breached its anti-steering obligation under the Digital Markets Act (DMA), and that Meta breached the DMA obligation to give consumers the choice of a service that uses less of their personal data. The EU’s action represents the first decision brought under the DMA.
The DMA requires that companies provide consumers with options on how their personal data is used in order to ensure fair business practices within the tech sector. Under the DMA, app developers distributing their apps via Apple’s App Store should be able to inform customers, free of charge, of alternative offers outside the App Store, steer them to those offers and allow them to make purchases. However, the EU found that Apple imposed numerous restrictions that effectively restricted consumers from doing so. The EU found that consumers could not fully benefit from alternative and cheaper offers as Apple prevents app developers from directly informing consumers of such offers. Apple did not adequately show that these restrictions are objectively necessary and thus were in violation of the DMA’s anti-steering obligation.
Meta “Consent or Pay” Advertising Model Illegal
In regard to Meta, the EU found that the social media platform giant violated the DMA by not allowing its users to exercise their right to freely consent to the combination of their personal data. Under the DMA, companies such as Meta are required to seek users’ consent for combining their personal data between services. Those users who do not consent must have access to a less personalized but equivalent alternative.
“In November 2023, Meta introduced a binary “Consent or Pay” advertising model. Under this model, EU users of Facebook and Instagram had a choice between consenting to personal data combination for personalized advertising or paying a monthly subscription for an ad-free service,” according to the EU. “However, according to the EU, this model is not compliant with the DMA “as it did not give users the required specific choice to opt for a service that uses less of their personal data but is otherwise equivalent to the ‘personalised ads’ service.”
Ultimately, the “Consent or Pay” model which provided users of Facebook and Instagram with an option to either consent to their personal data being used for advertisements or paying a subscription for an ad-free service was in violation of the DMA. However, since Meta did not provide an option to opt-in into a service that used less of their personal service, the EU found such a model noncompliant.
According to the EU, Meta introduced another version of the free personalized ads model, offering a new option that allegedly uses less personal data to display advertisements. The EU is currently analyzing the model to assess whether it is compliant with the DMA.
“Apple and Meta have fallen short of compliance with the DMA by implementing measures that reinforce the dependence of business users and consumers on their platforms,” Teresa Ribera, an executive vice president at the European Commission, said. “We have taken firm but balanced enforcement action against both companies, based on clear and predictable rules.”
Both companies are expected to appeal the decisions however, each are required to comply with the decision within 60 days or else will be subject to additional fines. 