European Union officials have tentatively determined that Meta Platforms Inc. breached the bloc’s Digital Markets Act regulation with a subscription offering it launched last year.

The European Commission, the EU’s executive branch, published its findings today. A final decision will be made in the probe by March 25, 2025. Meta could face steep fines if that decision reaffirms it breached the DMA.

The DMA is a piece of legislation that EU lawmakers passed in 2022 to regulate the tech industry. The law applies to operators of large online platforms that are designated as “gatekeepers” by competition officials. Meta is one of the six companies that have been designated as gatekeepers to date. 

Meta uses data collected from its users to deliver personalized ads across Facebook and Instagram. Under the DMA, some of the data processing operations that the company carries out can only be performed with users’ consent. To fulfill this requirement, Meta offers a subscription plan that opts consumers out of certain data processing in exchange for a monthly fee.

The EU today tentatively concluded that the company’s subscription offering doesn’t comply with the DMA. Officials provided two reasons for the decision.

The first reason relates to a DMA provision that states Meta must give users who opt out of data processing access to a “less personalised but equivalent version” of Facebook and Instagram. According to the European Commission, the company’s subscription offering doesn’t meet those criteria. Additionally, officials found that the offering “does not allow users to exercise their right to freely consent to the combination of their personal data.”

Launched last November, the subscription is available in the EU, Iceland, Liechtenstein, Norway and Switzerland. Besides disabling certain types of data processing, the plan also removes personalized ads from Facebook and Instagram. Meta offers two separate editions of the subscription. The first edition, which costs €9.99 per month, is available for the web versions of Facebook and Instagram, while the second costs €12.99 per month and covers the mobile versions.

“Our preliminary view is that Meta’s advertising model fails to comply with the Digital Markets Act,” said European Commission Executive Vice President Margrethe Vestager. “And we want to empower citizens to be able to take control over their own data and choose a less personalised ads experience.”

Meta argues that the offering does in fact comply with the DMA. “Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA,” Meta said in a statement. “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close.”

Meta’s argument is based on a 2023 ruling by the CJEU, the EU’s highest court. The ruling found that offering a subscription plan which opts users out of certain data processing is a valid way of complying with certain privacy requirements. However, the ruling focused on Meta’s compliance with the EU’s GDPR privacy law and not the DMA, the law at the center of today’s preliminary regulatory decision. 

According to TechCrunch, EU officials are arguing that Meta’s subscription offering also falls short in other ways. Last year’s CJEU decision specified that a subscription is a valid way of meeting certain privacy requirements only if it’s “necessary” to charge users a fee. According to the EU, it’s not necessary in Meta’s case.

If regulators conclude that the subscription does in fact breach the DMA, Meta could face fines equal to up to 10% of its worldwide annual revenue. The European Commission can also order companies to change business practices that are found to be in breach of the bloc’s competition rules. 

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