4-10-2023 (WASHINGTON) Meta, the parent company of Instagram and Facebook, is considering the introduction of a subscription-based model for European users who wish to opt out of ad tracking, according to an inside source. This development comes as the social media giant grapples with an increasing number of EU regulations designed to curb the influence of US tech giants.
Meta, founded by Mark Zuckerberg, derives a substantial portion of its billions in profits from providing advertisers with highly personalized user data. However, recent European regulations and court decisions have posed challenges to this practice.
The proposal, which has been presented to EU regulators, exemplifies the adjustment that major tech firms must make to align with forthcoming EU rules. According to the source, European subscribers could pay €10 (S$14) per month for a desktop version of Instagram or Facebook, or €13 per month for Instagram on their mobile devices.
Social media platforms have been increasingly considering the option of charging users for access to their services, either to comply with data privacy regulations or to enhance user identity verification.
However, this shift would mark a significant departure from the ad-supported model that has driven the rapid growth of the social media industry over the past decade, where users receive free access in exchange for ad tracking and personalized advertising.
The proposed model could help Meta meet several regulations, including the Digital Markets Act, which imposes a set of rules on major tech companies in Europe, including a prohibition on tracking users on other websites without clear consent.
This proposal also aligns with the recommendation of the EU’s highest court, which, in a July ruling, stated that users on the Meta platform who declined ad tracking should be offered an ad-free alternative “for an appropriate fee.” This decision echoed previous rulings against Meta and other tech giants, emphasizing the need for the US company to seek permission before collecting substantial amounts of personal data and rejecting various workarounds offered by Meta.
Meta did not directly comment on the Wall Street Journal report but stated in a press release that it still “believes in the value of free services supported by personalized ads.” The company added that it continues to explore options to ensure compliance with evolving regulatory requirements.
In the second quarter of 2023, Meta reported revenues of US$32 billion, with advertising accounting for US$31.5 billion of that total. Of the advertising revenue, approximately US$7.2 billion was generated in Europe.
