The logo of Meta is seen on a smartphone in front of displayed logos of Facebook, Messenger, Instagram, Whatsapp and Oculus in this illustration picture taken October 28, 2021.
Reuters Photo
Meta is considering paid versions of Facebook and Instagram that would have no advertising for users in the European Union, three people with knowledge of the company’s plans said, a response to regulatory scrutiny and a sign that how people experience technology in the United States and Europe may diverge because of government policy.
Those who pay for Facebook and Instagram subscriptions would not see ads in the apps, said the people, who spoke on the condition of anonymity because the plans are confidential. That may help Meta fend off privacy concerns and other scrutiny from EU regulators by giving users an alternative to the company’s ad-based services, which rely on analyzing people’s data, the people said.
Meta would also continue to offer free versions of Facebook and Instagram with ads in the EU, the people said. It is unclear how much the paid versions of the apps would cost or when the company might roll them out.
A Meta spokesperson declined to comment.
For nearly 20 years, Meta’s core business has centered on offering free social networking services to users and selling advertising to companies that want to reach that audience. Providing a paid tier would be one of the most tangible examples to date of how companies are having to redesign products to comply with data privacy rules and other government policies, particularly in Europe.
In July, the EU’s highest court effectively barred Meta from combining data collected about users across its platforms — including Facebook, Instagram and WhatsApp — as well as from outside websites and apps, unless it received explicit consent from users. In January, the company was also fined 390 million euros (about $421 million) by Irish regulators for forcing users to accept personalized ads as a condition of using Facebook.
The rulings stemmed from the 2018 enactment of Europe’s General Data Protection Regulation, or GDPR, which was landmark legislation to protect people’s online data.
Meta’s openness to creating paid subscriptions shows how those living in the EU, which comprises 27 countries and roughly 450 million people, may begin to see different versions of consumer technology products because of new laws, regulations and court rulings.
In recent weeks, as a new EU law called the Digital Services Act took effect to stem the flow of illicit content online, TikTok and Instagram users in the region have also been able to block personal data from being used to generate their social media feeds. Snapchat and Meta have stopped marketers from targeting teenagers ages 13 to 17 in Europe with personalized ads.
By next year, another EU tech-focused law, the Digital Markets Act, will take effect. That is set to force big tech platforms to change certain business practices to encourage competition and will have wide-ranging effects, with Apple expected to allow users in the EU to download alternatives to the App Store on iPhones and iPads for the first time.
“This shows that tech companies are complying with the EU’s digital regulations, suggesting that they remain beholden to governments and not the other way around,” said Anu Bradford, a Columbia University law professor and the author of “Digital Empires: The Global Battle to Regulate Technology.”
Meta, which also owns Messenger, has faced particular scrutiny from EU regulators. In May, the EU fined the Silicon Valley company 1.2 billion euros for violating its privacy laws by sending data on European citizens back to U.S. servers for the purposes of improving the company’s advertising technology. Meta has appealed the ruling.
Meta has been fined for other violations of GDPR, including a 265 million-euro fine for a 2021 data leak. Irish regulators have also levied fines of 225 million euros over violations in a case involving WhatsApp, and another 17 million euros over a data leak.
Some Meta insiders believe that giving users the choice of opting out of an ad-based service while still being able to access a paid version of Facebook or Instagram could alleviate some European regulators’ concerns, two of the people said. Even if few people choose to use the paid version, making such an option available could serve Meta’s interests in the region, they said.
Meta has not released its new app Threads, which is a rival to X, formerly known as Twitter, in Europe because of regulatory concerns.
Europe is the second most lucrative region for Meta after North America. Susan Li, Meta’s chief financial officer, said in April that advertising in the EU represented 10% of the company’s overall business. Meta’s revenue totaled nearly $117 billion last year.
Beyond its European challenges, Meta is in the midst of trying to rejuvenate its business after global economic jitters hampered ad-sales growth. It is also still pushing its vision of the immersive digital world of the metaverse, an expensive project championed by Mark Zuckerberg, the company’s CEO, which is still in its earliest days. And executives are focusing on developing artificial intelligence technologies and incorporating them into more of Meta’s products.