Meta faces EU antitrust violations over data consent issue

Despite involving the same law, the two cases are very different in many ways.

Apple has been accused primarily of making it too difficult and expensive for app developers to lure iOS users to cheaper deals outside the platform, without Apple receiving a larger share of the profits. Meanwhile, Meta has come under fire for charging high monthly fees to Facebook and Instagram users who don't consent to being monitored for ad targeting purposes by Meta and third-party services, which is said to violate the DMA. Here's why, as the European Commission puts it:

[Metas model] Users cannot opt ​​into a service that uses less personal data, but it is otherwise comparable to personalized, ad-based services. [and because it] We do not allow users to exercise their right to freely consent to the combining of their personal data.

One case is about restricting developers, the other is about putting pressure on users. But both are aimed at the core business model: Apple still makes the majority of its money from selling iPhones, but Services (including App Store fees) is the second most important part of its revenue mix, and probably will become the most important one day. Metas users' data is Apple's lifeblood, and probably will remain so for a long time to come. So both cases have a huge impact on Target's future revenue flows.

What the European Commission is doing with Meta is essentially antitrust enforcement of data protection.

The DMA rule reflects a growing tendency among tech antitrust regulators to treat large amounts of data like a moat-building competitive asset. The Commission says it gives companies a potential advantage over competitors who don’t have access to vast amounts of data, and raises barriers to offering online advertising and social networking services. But while there is a solid rationale for this trend, it’s hard to escape the notion that regulators are adopting this line because others have failed.

What Meta did here is not only illegal under the DMA, but likely also violates the General Data Protection Regulation (GDPR), which came into force more than six years ago. But enforcement of the GDPR is patchy and painfully slow, with the onus largely on underfunded national privacy regulators (in Metas' case, the Irish Data Protection Commission). To get around this problem, the DMA puts the European Commission itself in the role of enforcement authority, and requires that the case be resolved within a year of the investigation being launched. That gives both Meta and Apple a deadline of March next year to avert disaster.

The DMA also warned that companies could face much higher fines if they repeatedly breach the rules, from 4% of GDPR's global annual revenue up to 10% or even 20%.

Interestingly, the reason Meta tried the “pay or get consent” strategy is because court rulings under GDPR have eliminated all other legal options for profiting from users' data without their actual free consent. In a statement this morning, Meta protested that its ad-free subscriptions follow the instructions of Europe's highest court, and argued that its model complies with the DMA.

So, in a sense, privacy law put Meta in this position, and now antitrust law is trying to stop it. Read more below.

David Meyer

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