Might Meta Go Pay-Only in the EU?

Eric Seufert, writing at Mobile Dev Memo, spitballing how Meta might respond if the EU accepts the recommendation from the EDPB that their “Pay or OK” model is illegal:

Charge a nominal fee for the ad-supported versions of Facebook and Instagram

Meta could introduce a small fee to use the ad-supported versions of Facebook and Instagram, rendering them as completely paid products in the EU. By eliminating its free tier, Meta should theoretically sidestep the conditions proposed in the EDPB’s opinion, since the elimination of a free tier supported by personalized advertising renders the Pay or Okay restrictions irrelevant.

As frequent MDM Podcast guest Mikołaj Barczentewicz points out in this blog post, both Netflix and Disney+ target ads behaviorally in their paid, ad-supported tiers. Meta could point to these products as examples of this pricing model being invoked: all options are paid, but the cheapest option is subsidized by behaviorally-supported ads. Of course, the EDPB has given itself latitude with its definition of “large online platform” to only litigate specific instances of commercial strategy.

I didn’t think of this when I spitballed my own ideas for how Meta might respond. Maybe they offer two tiers: €1/month with targeted ads, or €6/month without ads. Maybe they even make the fee for the ad tier truly nominal, say €1/year? The problem with this might be that too few people are willing to pay anything at all for social networking. Because it’s always been free-of-charge, people (not unreasonably!) now think it ought to forever remain free-of-charge.

Regarding the “just exit the EU” option, Seufert writes:

I don’t believe that Meta will respond by exiting the EU market altogether — at least not in the near term. Per above: the EU is 10% of (what I understand to be) Facebook’s global advertising revenue, and GDPR fines aren’t as significant as those incurred under the DMA. The maximum fine under the GDPR is 4% of annual worldwide turnover, whereas the maximum fine under the DMA is 20% of annual worldwide turnover. While I do believe the EU regulatory regime’s intransigence will influence a scaled, US-domiciled tech company to exit the EU market in the medium term, my sense is that Meta won’t take that course of action in immediate response to this decision.

That 10 percent figure is big but not indispensable. And it’s not much bigger than Apple’s 7 percent figure for App Store revenue from the EU. The EU is indeed a big and important market, but it’s nowhere near as big or important as the European Commissioners think.

Friday, 19 April 2024