Meta Offers to Reduce No-Ads Subscription Fee for Facebook and Instagram in EU, but Critics Want No Fee at All

Foo Yun Chee, reporting for Reuters from day 2 of the EC’s DMA compliance workshops:

Meta Platforms has offered to almost halve its monthly subscription fee for Facebook and Instagram to 5.99 euros from 9.99 euros, a senior Meta executive said on Tuesday, a move that aims to address concerns from privacy and antitrust regulators. The price cut follows mounting criticism from privacy activists and consumer groups about Meta’s no-ads subscription service in Europe, which critics say requires users to pay a fee to ensure their privacy. Meta launched the service in November to comply with the Digital Markets Act (DMA), which curbs its ability to personalise advertisements for users without their consent, hurting its major revenue source. [...]

Austrian privacy activist Max Schrems said the issue is not about the fee.

“We know from all research that even a fee of just 1.99 euros or less leads to a shift in consent from 3-10% that genuinely want advertisments to 99.9% that still click yes. The GDPR requires that consent must be ‘freely’ given,” he said, referring to the EU privacy legislation.

“In reality it is not about the amount of money — it is about the ‘pay or okay’ approach as a whole. The entire purpose of ‘pay or okay’ is to get users to click on okay, even if this is not their free and genuine choice. We do not think the mere change of the amount makes this approach legal.”

Consider Meta’s average revenue per user (ARPU) per quarter by region. For the US and Canada, it’s about $50–60 per quarter, or over $200 per year per user. In Europe, with its stagnant economy, it’s about $20 per quarter and rising. (This number is probably inflated by wealthier non-EU countries in Europe, particularly the UK, but Meta doesn’t break out ARPU by country.) So €10/month was a reasonable deal, especially when extrapolating Meta’s ARPU trendline. €6/month is a veritable bargain — users who opt to pay would be generating slightly less than average revenue, but gaining a no-ads experience. (Sorry for mixing euros and dollars here, but they’re close enough at the moment — $1 ≈ €0.92 — to treat them interchangeably for ballpark comparisons.)

But Schrems’s argument, seemingly, is that Meta should be required to offer a no-tracking version of Instagram and Facebook completely free of charge. Meta could show ads to those users, but not the sort of ads that actually generate money. “Why can’t you just sustain your business with non-personalised ads without charging a subscription?” was, according to Kay Jebelli’s live coverage of the workshop, an actual question asked today. Next up: free ice water in hell?

Privacy fundamentalists seem upset that when given the choice between a free service with personalized ads (and tracking to do the personalization), and paying a fair fee for a service, the overwhelming majority choose the personalized ads.

Tuesday, 19 March 2024