Meta has issued a warning to European users that their experience on Facebook and Instagram may become ´materially worse´ following a crucial regulatory ruling by the European Commission. The social media giant recently rolled out a ´consent or pay´ model for its EU users, forcing them to either subscribe monthly or permit data tracking for targeted advertising. Last week, the European Commission determined this model violated the Digital Markets Act (DMA), fining Meta €200 million and requiring modifications to its approach.
Meta stated in its quarterly report that responding to the EU´s demands could have a significant negative effect on both user experience and the company’s European business revenue, with potential changes expected by the third quarter of the year and possibly taking effect while appeals are ongoing. The UK is not affected, as the ad-free subscription has yet to launch there, but Meta is in discussions with the UK’s Information Commissioner’s Office regarding a similar model for British users. Meta emphasized the economic value of personalized advertising, saying it generates over £19.5 billion annually for UK businesses.
Regulators argue that Meta´s current system does not allow users genuine freedom in consenting to data use. The European Commission is also evaluating a separate Meta proposal designed to serve ads with less personal data. Meta was given 60 days to comply with the recent ruling or face further fines. The regulatory pressure is not limited to Meta: Apple was recently fined €500 million for its App Store practices. Analysts suggest Meta may be leveraging dissatisfaction among European users to sway public opinion against stricter regulation.
Despite the regulatory turbulence, Meta reported quarterly earnings that surpassed Wall Street expectations, largely due to continued strength in advertising revenue. The company spotlighted its heavy investment in artificial intelligence tools such as Meta AI and AI-powered smart glasses, with CEO Mark Zuckerberg noting that Meta AI now attracts nearly one billion users per month. However, the launch of the Meta AI chatbot in Europe triggered negative reactions among some WhatsApp users, despite it being billed as optional. Meta is also contesting an ongoing antitrust lawsuit from the US Federal Trade Commission, which alleges Meta’s acquisition of Instagram and WhatsApp entrenched its social media monopoly.
