11:13 AM EDT, 07/01/2024 (MT Newswires) -- Meta Platforms' ( META ) advertising model is in breach of the European Commission's new digital competition law, according to the regulator's preliminary view.

The European Union's executive arm informed Meta that its "pay or consent" advertising model compels Facebook and Instagram users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of the social media platforms. The commission said Monday that the practice violates its Digital Markets Act, which was launched in March and aims to ensure a level-playing field in the digital sector.

Meta introduced its "pay or consent" offer in November to comply with EU regulations. It currently gives users the choice to pay a monthly fee for an ads-free version of Facebook and Instagram, or allow Meta to use their personal data for targeted advertising.

"Our preliminary view is that Meta's advertising model fails to comply with the Digital Markets Act," Margrethe Vestager, executive vice president of competition policy at the EC, said in a statement. "We want to empower citizens to be able to take control over their own data and choose a less personalized ads experience."

The regulator launched its non-compliance investigations under the Digital Markets Act into Meta, iPhone maker Apple (AAPL) and Google parent Alphabet (GOOG, GOOGL) in March. Last week, the commission informed Apple of its initial findings that the company's steering rules in its App Store marketplace breached the law.

The regulator plans to conclude its investigation by March next year and could fine Meta up to 10% of its worldwide turnover, if found guilty. There is a potential for the penalty to increase to as much as 20% in case of repeated violations.

A spokesperson for Meta told MT Newswires in an emailed response that the company's subscription for no ads follows the direction of the highest court in Europe and "complies" with the Digital Markets Act. "We look forward to further constructive dialogue with the European Commission to bring this investigation to a close," the spokesperson said.

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