3 November 2023

The Data Privacy Revolution: Meta's Subscription Shift Sparks Controversy In The EU

Preiskel & Co


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Preiskel & Co LLP, is an English law firm independently recognised as a leader in the telecommunications, media and technology sectors. Preiskel & Co team of lawyers is truly international many of whom are qualified in multiple jurisdictions. This international mind-set has proved of considerable advantage to many clients, as the firm advises on matters in England but also coordinates advice across Europe, and other continents. The firm also advises on issues concerning outer space and the virtual world.
In a controversial move, Meta is gearing up to charge EU users for access to Instagram and Facebook.
European Union Privacy
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In a controversial move, Meta is gearing up to charge EU users for access to Instagram and Facebook. Unless users consent to allow the tech giant to use their personal information for targeted ads, a monthly subscription fee of $14 for Instagram on mobile devices or $17 for both Facebook and Instagram on desktop will be imposed. This development comes following discussions with EU regulators who are keen on curbing the ways Big Tech companies profit from user data.

The plans, reported by insiders and The Wall Street Journal, highlight a growing trend among social media platforms. Traditionally offering all features for free, these platforms are increasingly exploring subscription-based models. This shift is driven by mounting pressure from privacy regulations and the changing dynamics of digital marketing budgets.

For example, the Chinese video app TikTok recently began testing an ad-free subscription service, while Snapchat and X (formerly Twitter) offer optional subscriptions that provide paying users with exclusive features such as verified profiles, custom app themes, and fewer ads. Elon Musk, the owner of X, even hinted at a "small monthly payment" to combat the issue of bots on the platform.

Meta's anticipated changes are expected to roll out in the coming weeks, and they have a significant deadline to meet. In response to a Luxembourg court ruling, Meta has until the end of November to comply. This ruling found that Facebook, which is owned by Meta, cannot justify using personal data to target consumers with ads unless they obtain explicit consent. The court's recommendation to explore a subscription model has significant implications.

The tech giant is actively engaging with European regulators to ensure their approach aligns with evolving regulatory requirements. Under the proposed plans, Meta will offer an ad-free version of Instagram and Facebook for those willing to pay, while those who consent to targeted ads based on their personal information can access a free version.

Notably, Max Schrems, an Austrian privacy activist, has voiced concerns about the concept of fundamental rights being for sale. He questions whether we might be heading towards a future where even rights like voting and free speech require payment, possibly excluding those who can't afford them. This underscores the substantial shift in the realm of data protection, potentially leading to legal battles.

Beyond the court ruling, the EU has been actively enacting a series of rules that redefine the way Big Tech companies handle data. The Digital Markets Act, set to come into force in March, imposes new legal obligations on companies to share data with competitors, promoting fair competition (see our previous blogpost Digital Markets Act – What does it mean?). The Data Governance Act aims to encourage data sharing between companies and sectors, even if not explicitly targeting large online platforms.

It's essential to note that Meta reported second-quarter revenues of $32 billion, with $31.5 billion stemming from advertising. Europe is its second-largest market after the US and Canada, generating $7.2 billion. These tech giants already operate under severe restrictions concerning the use of users' private data.

In May, Facebook, under Meta's ownership, faced a record €1.2 billion fine for violating privacy laws that demand appropriate safeguards for transferring data from the EU to the US. TikTok was separately fined €345 million last month for mishandling personal data of children and teenagers on its platform (see our previous article Irish Data Protection Watchdog fines TikTok €345 million for breaking EU data law on children's accounts).

Meta acknowledges the value of free services supported by personalised ads but continues to explore options to adapt to evolving regulatory requirements. At this time, they have not revealed further details about their plans.

As Meta's subscription model unfolds, it raises significant questions about data privacy, user consent, and the delicate balance between fundamental rights and profitability. The legal and regulatory landscape for Big Tech companies is rapidly evolving, and the EU is at the forefront of shaping this new era.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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