Yahoo Finance Europe’s privacy laws put Meta in a tight spot. Now its antitrust laws are going in for the kill
A week ago, Apple became the first company to face preliminary charges under the EU’s new Big Tech antitrust law, the Digital Markets Act. Now, again as predicted, it’s Meta’s turn.
Though they involve the same law, the two cases are in many ways very different.
Apple stands accused primarily of making it difficult and overly expensive for app developers to steer their iOS users to cheaper deals off the platform, where Apple doesn’t get to take its lucrative revenue cut. Meta, however, is in trouble for charging a hefty monthly fee to Facebook and Instagram users who won’t “consent” to being surveilled across Meta and third-party services for ad-targeting purposes. This allegedly violates the DMA because, in the words of the European Commission:
“[Meta’s model] does not allow users to opt for a service that uses less of their personal data but is otherwise equivalent to the ‘personalized ads’ based service [and because it] does not allow users to exercise their right to freely consent to the combination of their personal data.”
One case is about restricting developers; the other about railroading users. However, both take aim at core business models. Apple still earns most of its money from selling iPhones, but services (including App Store commissions) are the second-most important part of its revenue mix, and perhaps one day the most important. The data of Meta’s users is and probably always will be its lifeblood. Both cases therefore have enormous ramifications for their targets’ future revenue flows.
What the Commission is doing to Meta is essentially data-protection enforcement through antitrust means.
The DMA’s rules reflect the increasing tendency of tech antitrust regulators to treat piles of data like the moat-building competitive asset they are. The Commission mentions “potential advantages compared to competitors who don't have access to such a vast amount of data, thereby raising high barriers to providing online advertising services and social network services.” However, while there’s a solid theoretical basis to this trend, it’s hard to escape the idea that regulators are also taking this tack because others have failed.
What Meta has done here isn’t just allegedly illegal under the DMA; it also very likely violates the General Data Protection Regulation (GDPR), which went into effect over six years ago. But enforcement of the GDPR has been patchy and achingly slow, largely because it’s the responsibility of underfunded national privacy regulators (the Irish Data Protection Commission in Meta’s case.) To avoid this problem, the DMA puts the European Commission itself in the role of enforcer, while also demanding a resolution to the case within a year of the investigation opening—which, for both Meta and Apple, makes next March the deadline for averting disaster.
The DMA also threatens much higher fines than the GDPR’s 4% of global annual revenue—up to 10%, or even 20% if the company persistently breaks the rules.
Funnily enough, Meta only attempted its pay-or-consent tactic because GDPR-based court rulings removed all its other legal options for profiting off its users’ data without their actual free consent. “Subscription for no ads follows the direction of the highest court in Europe,” Meta protested in a statement this morning that also claimed its model “complies with the DMA.”
So, in a sense, privacy law corralled Meta into this position, and now antitrust law is going in for the kill. More news below.
David Meyer
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This story was originally featured on Fortune.com
