The European Commission announced preliminary findings Monday that social media company Meta was in violation of the Digital Markets Act over its “pay or consent” advertising model.

Meta, Facebook’s parent company, introduced a new option for EU Facebook and Instagram users to choose between a paid ad-free version or free alternative with personalized ads in November 2023. The EU Commission said that such an advertising model does not comply with the new regulatory changes outlined in Article 5(2) of the Digital Markets Act. In their opinion, this model does not allow users to choose a less personalized alternative based on less personal data. Furthermore, users are not given the opportunity to freely consent to the combination of their personal data, while under the DMA, users who refuse to have their data combined should have access to an equivalent service based on less personal data.

The Digital Markets Act (DMA), which came into force in March, is an EU law designed to make markets in the digital sector fairer and more competitive, which establishes a set of clearly defined objective criteria for determining gatekeepers, i.e. large digital platforms providing so-called essential platform services, such as online search engines, app stores, messaging services, and others. It sets guidelines to ensure that companies behave fairly and allow for competition online, as mandated by the EU.

Meta was given the opportunity to review documents relating to the investigation and provide a written response to the Commission’s findings. The investigation must be fulfilled within a timeframe of 12 months and if its findings are confirmed, the Commission will decide that the Meta model does not comply with the DMA. If Meta does not comply, the may face a fine. In addition, in case of systemic violation, the Commission may apply additional measures, such as selling the business or prohibiting the purchase of additional services by the company.

The decision on Meta is the latest in the European Union’s efforts to regulate big tech companies. Last week, the EU made its first allegations under the DMA, accusing Apple of preventing app developers from pointing users to more affordable alternatives outside the App Store. The EU also accused Microsoft of violating antitrust laws by combining the Teams messaging and video conferencing application with the popular Office business software.