The European Union (EU) has concluded that Meta Platforms has violated the Digital Markets Act (DMA). If the preliminary conclusion is confirmed, Meta could face a fine of up to 10% of its annual revenue, amounting to $13.4 billion.
This marks an expansion of the EU’s anti-competition sanctions against big tech companies in the U.S., with Meta following in the footsteps of Apple and Microsoft Corporation (MS).
On July 1, the EU determined that Meta violated the DMA by introducing personalized advertising services.
Meta, the parent company of Facebook and Instagram, started a service last year in Europe that sends personalized ads to subscribers who did not sign up for paid services.
The EU judged this as an act that hinders market competition and concluded that it is an abuse of power for Meta to force users to either pay or allow their personal information to be used for advertising.
Meta introduced a new service following last year’s ruling from the European Court of Justice (ECJ), the highest court in the EU.
After the ECJ ruling, Meta launched a service in October 2023 that requires users to pay a minimum of $10 per month if they do not agree to the collection of data for advertising purposes.
However, the Commission stated in a declaration on July 1 that Meta’s personalized advertising service violated the EU’s DMA in two key aspects.
The first violation was that users were not allowed to choose a service similar to the personalized advertising-based service while using less personal information.
The Commission emphasized that users should have the option to “receive the benefits of personalized advertising services even with less information being used.”
The second violation was that Meta’s personalized advertising service did not allow users the right to free consent. Users should have the freedom to decide whether their data can be used for online personalized advertising, but Meta effectively forced users to use their information.
Meta will have to pay a hefty fine if it does not correct the identified issues before the EU Commission makes a final decision.
According to the DMA, in this case, up to 10% of the total annual sales worldwide should be paid as a fine. If the violations are repeated, the limit of the fine increases to 20%.
Meanwhile, the EU Commission made a preliminary conclusion on June 24 that Apple violated the DMA, followed by MS on June 25.
If final decisions are made, Apple, MS, and Meta each have to pay up to 10% of their total annual sales worldwide as a fine.
The deadline for the final decision for Apple is March 25, 2025.
Following Apple, both MS and Meta are at high risk of facing a hefty fine around the same time.
