It has been widely reported in the media that Meta plans to respond to adverse court rulings against its advertising practices by launching an ad-free version of Instagram and Facebook in the EU. So why is Meta doing this? In recent months Meta has been forced by the European courts to move to a consent mechanism: the legal basis on which it can process users' personal data to serve targeted advertisements to them. Meta's main source of revenue is derived from advertising and they have historically sought to rely on legal grounds of necessity or legitimate interests to serve personalised ads to users (Article 6 of the GDPR). Moving away from this model and obtaining users' explicit consent to the processing of their data for ad targeting represents a seismic change to Meta's business operations.
In order to plug an anticipated shortfall in ads revenue from users who “opt out”, Meta will offer a subscription-based, ad-free version of Instagram and Facebook with monthly charges in the region of USD 14 to USD 17 (depending on the package purchased). Users would therefore have the option to “pay or okay” - accept targeted ads for free access or pay a fee instead. The question is: would a consent be valid in this scenario under EU data protection laws?
Under the GDPR, consent is defined as “any freely given, specific, informed and unambiguous indication of the data subject's wishes by which he or she, by a statement or by a clear affirmative action, signifies agreement to the processing of personal data relating to him or her”. A consent would not be considered valid where an individual has no real choice and is unable to refuse or withdraw their consent without suffering a detriment (i.e., the provision of a service cannot be downgraded). So in this scenario, would the withdrawal of access to Meta's platforms unless a fee is paid where users opt out of ad targeting constitute a “detriment” to them (and therefore fall foul of the law)?
In Meta v. Bundeskartellamt C-252/21 (2023), the Court of Justice of the European Union (CJEU) appeared to endorse “pay or okay” models where non-consenting users are “offered, if necessary for an appropriate fee, an equivalent alternative not accompanied by such data processing operations”. The CJEU also indicated that the holding of a dominant market position would not in and of itself prevent users of that social media network from validly giving their consent. Accordingly, there are legitimate grounds on which Meta could pursue a “pay or okay” model for Instagram and Facebook.
However, the CJEU's requirements for a lawful consent to such processing are potentially more challenging to meet. The CJEU indicated that any consent would need to be sufficiently granular to cover each type of processing activity. Would a blanket consent option provide sufficient granularity to users to satisfy this requirement? In that regard, there may well need to be individual consents for the processing of “on Facebook data” (being data related to a user's activity within the social network) and “off Facebook data” (being data related to a user's activity outside Facebook). And outside of the regulatory ambit, what impact would an expected reduction in the volume of user data have on Meta's ad serving capabilities and their attractiveness to advertisers? Would the move precipitate a fundamental shift in Meta's revenue streams and the data economy, or something more negligible?
Beyond the CJEU, national regulators could yet scupper Meta's plans and there will likely be a variety of approaches across the single market. For example, the Austrian regulator (DSB) currently requires that, for cookie walls (or “pay or okay” models) to meet the requirements of EU and Austrian law: 1) the provider must not have a monopoly position; and 2) the payment alternative must be set at an appropriate and fair price (i.e., not at an unrealistically high price). Meta would clearly breach the first limb of this test and the question of what level of fee is “proportionate” is as yet untested.
It is also worth noting that the public reaction has been fierce in some quarters. Critics have pointed to the alleged unfairness of rights being granted to only those people who can afford to pay subscription fees. The activist, Max Schrems, has decried the news, claiming that “[f]undamental rights cannot be for sale” and threatening to litigate the matter “…up and down the courts”.
Whatever happens, this is clearly an evolving area of law and the landscape is changing for social media networks, advertisers and consumers alike. We await further news of how and when Meta plans to roll out its new subscription tier(s) in the EU.