The European Commission on Monday informed Meta - owner of Facebook, Instagram and WhatsApp - that its policy of asking users to either accept personalized advertising across its services or pay may violate the European Union's digital "gatekeeper" rules.
The commission sent the company a "preliminary view" that the policy breaches the Digital Markets Act (DMA). The DMA regulates the behaviour of digital "gatekeepers," meaning companies that hold powerful, entrenched positions in the EU's digital economy, acting as intermediaries between many users and businesses.
Meta could face fines as high as 10% of its global revenue if the commission's final decision upholds this assessment, which is not final and is part of an ongoing investigation into the company.
The commission said in a statement on Monday that to comply with the DMA, users who refuse consent "should still get access to an equivalent service which uses less of their personal data."
Though the investigation is under the DMA - which is essentially a digital competition law - consent for the processing of personal data is normally regulated under the EU's General Data Protection Regulation (GDPR).
But the DMA has specific rules where a gatekeeper wants to combine personal data from its different services. It requires gatekeepers to ask for consent, and to provide an equivalent alternative service if users refuse.
The commission said Meta's model "does not allow users to exercise their right to freely consent to the combination of their personal data."
The commission has until March 25 next year to reach a final decision.
In a statement, a Meta spokesperson said, "Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close."
The court case mentioned by the Meta spokesperson is the EU Court of Justice's ruling in July last year, which stemmed from a GDPR dispute between Meta and Germany's antitrust regulator, the Federal Cartel Office.
The court said users who refuse consent "are to be offered, if necessary for an appropriate fee, an equivalent alternative not accompanied by such data processing operations."
However, the court was examining the principle of freely-given consent under the GDPR, and not the DMA provision underpinning the commission's preliminary view on Monday.