Subscribing to the ad-free version or giving consent to profiling to continue enjoying Facebook and Instagram for free? Why has Meta introduced this new business model and what are the consequences in terms of personal data protection.
As of 6 November 2023, Meta Platforms has modified its policy, introducing a “pay or okay” business model by proposing a subscription for Facebook and Instagram users, ensuring their data is not processed for behavioural marketing purposes. Specifically, users of these social networks were asked to subscribe to a monthly plan of € 12.99 to avoid profiling or, alternatively, to explicitly consent to behavioural advertising to continue using the platforms for free.
This new strategy by Meta aligns with a complex legal context. In December 2022, the European Data Protection Board (EDPB) issued two binding decisions on the legality and transparency of data processing activities for personalized advertising conducted by Facebook and Instagram. These decisions recognized a violation of GDPR by Meta, pointing out that the user-platform contract does not constitute a suitable legal basis for such data processing. Due to the absence of an appropriate legal basis for targeted advertising data processing, the Irish Data Protection Authority imposed a fine of € 390 million on Meta Ireland on 31 December 2022.
In this context, the Court of Justice of the European Union, in its judgment of 4 July 2023 “Meta Platforms and Others (General terms of use of a social network) – C-252/21”, clarified that the legal basis of the performance of the contact can only be invoked if data processing is objectively essential for the main purpose of the performance of the contract. Furthermore, the Court declared that the “legitimate interest” of the data controller cannot justify Facebook’s personalized advertising used to finance the social network itself. Consequently, Meta’s only viable legal basis for users in the EEA is obtaining their explicit, informed, and specific consent. Lastly, on 27 October 2023, the EDPB adopted an additional Urgent Binding Decision, requiring Meta to obtain users’ consent for behavioural advertising.
To comply with these decisions and, in general, with the European regulatory requirements, Meta Ireland has introduced a new subscription model for users, based on an observation made by the CJEU in the aforementioned judgment of 4 July 2023 that allows the social network to introduce an equivalent alternative to ads for an “appropriate fee” if users choose not to consent to data processing operations not necessary for the performance of the contract, such as personalized advertising.
However, even this new system raises doubts about its compatibility with European regulations on personal data processing. Firstly, the most advanced criticism concerns the appropriateness of the requested price, which, according to the Austrian activist Max Schrems, seems purposely disproportionate to discourage this option considering that Meta’s revenues are primarily based on personalized advertising. Moreover, it has been noted that the system in question would set a dangerous precedent, as other companies might emulate this approach, making the “cost of privacy” unsustainable for personal data protection on the web.
Furthermore, the effectiveness of the “freely given consent” – required from users who choose to continue using the service with targeted ads – remains dubious, considering the asymmetry of information and the power imbalance between Meta and users. However, GDPR prohibits conditioning the use of a service on consent to not necessary data processing (Instagram and Facebook services would function perfectly without profiling). Moreover, the EDPB highlighted that consent cannot be considered free if its refusal implies a significant additional cost for the data subject. Lastly, this business model may not be compatible with the right to object to data processing for direct marketing purposes.
In conclusion, this is an unprecedented scenario in the Big Tech world, already experimented by European journalistic websites, with which a factual existing situation has been made explicit: personal data becomes an alternative form of payment to money. It is now the responsibility of European institutions to assess the compatibility of this mechanism with Union law and to determine whether Meta’s approach may represent a risk to the fundamental rights of European citizens.
DISCLAIMER: This article merely provides general information and does not constitute legal advice of any kind from Macchi di Cellere Gangemi which assumes no liability whatsoever for the content and correctness of the newsletter. The author or your contact in the firm will be happy to answer any questions you may have