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EU Targets Meta's "Pay or Consent"

The Consumer Protection Cooperation Network (CPC), comprising consumer protection authorities from the EU and its member states, has determined that Meta's "pay or consent" model potentially contravenes EU consumer protection regulations. On July 25, 2024, under the aegis of the French Directorate General for Competition, Consumer Affairs, and Fraud Control (DGCCRF), the European Commission issued a formal notice to Meta. Meta is obligated to present a remediation plan or take necessary corrective measures by September 1, 2024, failing which the CPC may resort to legal recourse, including sanctions.

 

In 2023, Meta mandated that users of Facebook and Instagram either subscribe to a paid service or consent to the utilization of their personal data for personalized advertising, known as the "pay or consent" model. The CPC contends that this model likely infringes upon the Unfair Commercial Practices Directive (UCPD) and the Unfair Contract Terms Directive (UCTD) due to:

- The promotion of the term "free," coercing users disinclined to pay to consent to data usage for personalized advertisements.

- Guiding users through various pages within the applications or websites, thereby leading them to disparate sections of the Terms of Service or Privacy Policy, causing confusion.

- The use of ambiguous terminology, such as "your information" instead of "personal data," or suggesting that paying users will not encounter any advertisements, which is misleading as they may still see ads in user-shared content.

- Implementing the model without providing sufficient time and opportunity for users to assess their relationship with Meta, thereby compelling them to make hasty decisions to access their accounts.

 

It is crucial to note that this EU action is predicated on consumer protection laws, distinct from recent actions pursuant to the Digital Markets Act, Digital Services Act, or General Data Protection Regulation.

 

 

Marketing, by its nature, seeks to attract customers, and employing specific terminology or altering interface designs are conventional marketing strategies. These strategies do not inherently constitute unfair competition or practices. While Articles 5 to 9 of the UCPD prohibit unfair commercial practices, the annex to the directive elucidates that the criteria for such determinations are stringent.

 

For instance, perpetually claiming a product is free while ultimately requiring consumers to pay beyond necessary expenses (such as shipping) constitutes an unfair commercial practice. However, based on the current information, Meta does not charge users who opt for the free service, which leaves room for debate regarding whether this constitutes an unfair practice.

 

The legal considerations surrounding the use of personal data for personalized advertising under the UCPD and the GDPR present distinct compliance challenges, necessitating a nuanced analysis that distinguishes between consumer protection and data privacy frameworks. The outcome of this case will undoubtedly set a significant precedent, likely influencing Taiwan’s regulatory landscape and necessitating close scrutiny and potential legislative adjustments.

 

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