Meta is looking to avert the scrutiny of regulators in the European Union by potentially offering ad-free versions of Facebook and Instagram under a paid plan.
If rolled out, Meta will make the paid version of the apps available along with the free version that would display ads in the region.
The news comes amidst continued scrutiny of the tech giant by regulators in the E.U. and the U.S., where lawmakers have been concerned with the company’s data-gathering techniques, lax data privacy rules, and ability to influence public discourse.
In recent years, the company has become a key target for regulators across the European Union. In January 2023, Irish regulators slapped the company with a fine of over $420 million for forcibly making users accept personalized ads if they wished to use Facebook. Later, in May 2023, Meta was fined $1.3 billion for violating GDPR rules by transferring data of European users to the U.S. Two months later, the company was banned by the E.U. for combining user data across its family of apps, which includes Facebook, Instagram, Threads and WhatsApp.
And last month, E.U.’s Digital Services Act forced Meta to show content to its users chronologically, see results “only for words they enter” instead of results based on various algorithms. The new rule also prevents Meta from displaying Stories and Reels of accounts that users do not follow.
Next year, Meta and other tech companies will further feel their leash tighten as the new Digital Markets Act goes into effect, requiring them to embrace practices that foster competition. For example, Apple is expected to allow users in the region to download alternatives to the Apple App Store on their iPads and iPhones.
The new digital privacy and security-focused E.U. rules are, in essence, fundamentally changing the user experience the company extends to users in the region versus the U.S. Meta has built its business around developing free products for the past 20 years and monetizing its various products through ads.
The E.U. is today a lucrative market for Meta, with advertising in the region accounting for 10% of the company’s overall revenue, which totaled $117 billion last year. This means that a complicated regulatory environment poses significant challenges for Meta and can directly impact its bottom line.