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Meta's EU ad-free subscription faces early privacy challenge

Meta's shiny new bid to circumvent European Union privacy rules -- by offering users a false choice between paying it a hefty monthly subscription for ad-free versions of Facebook and Instagram or agreeing to give up their privacy rights in exchange for free access to its social networks, meaning they will be tracked and profiled by the behavioral advertising giant -- has been targeted with a complaint filed by privacy rights group noyb in Austria.

As soon as Meta's plan to deploy a 'pay or okay' tactic to game a consent legal basis leaked to journalists last month noyb committed to fighting it "up and down the courts". It's making good on that pledge now by kicking off a challenge with Austria's data protection authority.

Meta's ad-free subscription for regional users has an initial cost of €9.99/month on web or €12.99/month on iOS or Android per linked Facebook and Instagram accounts in a user’s Accounts Center (with an additional fee of €6/month on web and €8/month on iOS or Android set to apply for each additional account listed in a user’s Account Center from March next year).

noyb contends that the cost of the subscription is "way out of proportion" to the value Meta derives from tracking users in the region -- citing reporting by the company that the average revenue per user in Europe between Q3 2022 and Q3 2023 was just $16.79. That figure would equate to annual revenue of €62,88 per user -- whereas Meta's subscription puts a minimum annual cost for users on safeguarding their privacy of nearly €120, rising to over €250 for users who have both a Facebook and Instagram account.

The individual on whose behalf noyb has filed the complaint in Austria is in "financial distress" and receives unemployment assistance -- indicating he cannot afford to splash out so much to protect his privacy. Commenting in a statement, noyb's founder and chairman, Max Schrems, said: “More than 20% of the EU population are already at risk of poverty. For the complainant in our case, as for many others, a ‘Pay or Okay’ system would mean paying the rent or having privacy.”

noyb also contends that if other app makers were to adopt the same approach the cost for users to protect their privacy would further inflate -- with EU citizens facing a "fundamental rights fee" that could stack up to several thousands of euros per year for people with an average number of apps installed on their phone.

"If Meta is successful in defending this new approach, it is likely to set off a domino effect," it warns. "Already now, TikTok is reportedly testing an ad-free subscription outside the US. Other app providers could follow in the near future, making online privacy unaffordable.

"According to Google, the average person has 35 apps installed on their smartphone. If all of these apps followed Meta’s lead and charged a similar fee, people would have to pay a 'fundamental rights fee' of €8,815.80 a year. For a family of four, the price of data privacy would rise to €35,263.20 per year -- more than the average full-time income in the EU. Obviously, these figures become even more extreme in EU Member States with lower average incomes."

Meta has pointed to a reference in a Court of Justice of the EU ruling from this summer, related to its legal basis for processing user data for ads, in order to justify charging a fee for a tracking-free product. However the Court caveated the possibility of it charging a fee for a tracking-free version of its product by stipulating any such charge would need to be “necessary" and "appropriate”.

noyb's complaint appears to focus on the appropriateness of Meta charging users way more money to avoid its tracking than it earns per individual it tracks. Or, in short, the adtech giant has intentionally created a privacy rip-off in order to keep ripping off people's privacy.

The EU's General Data Protection Regulation (GDPR) sets out the conditions for what constitutes legally obtained consent to process personal data -- which includes a hard requirement for consent to be "freely given".

noyb's argument boils down to demonstrating that such high financial cost represents an unobtainable bar on EU citizens being able to freely choose to obtain their fundamental right to privacy.

It also points to research which it says indicates the vast majority of people do not want their data to be used to target them with "personalizeds" ads -- while other studies show people are overwhelmingly forced to consent to tracking when faced with paying a fee.

“Fundamental rights are usually available to everyone. How many people would still exercise their right to vote if they had to pay €250 to do so? There were times when fundamental rights were reserved for the rich. It seems Meta wants to take us back for more than a hundred years,” said Schrems.

“EU law requires that consent is the genuine free will of the user. Contrary to this law, Meta charges a 'privacy fee' of up to €250 per year if anyone dares to exercise their fundamental right to data protection,” added Felix Mikolasch, data protection lawyer at noyb, in another supporting statement.

The privacy rights group is calling for Austrian's DPA to instigate an urgency procedure to stop what it contends is Meta's illegal processing on account of "the seriousness of the violations and unusually high number of users affected". It is also urging the DPA to imposes a deterrent fine to make sure others do not seek to imitate Meta's privacy rip-off.

Meta was contacted for a response to noyb's complaint.

Spokesman Matthew Pollard pointed back to its earlier blog post -- in which it defends the approach, claiming it's compliant with EU laws. He also sent us this statement:

The option for people to purchase a subscription for no ads balances the requirements of European regulators while giving users choice and allowing Meta to continue serving all people in the EU, EEA and Switzerland. In its ruling, the CJEU expressly recognised that a subscription model, like the one we are announcing, is a valid form of consent for an ads funded service.

On the cost of the subscription, Pollard suggests Meta's pricing is "in line" with other ad-free premium subs offered by streaming services -- such as YouTube Premium, Spotify Premium, Netflix Standard and Twitch Turbo.

However these rivals don't always offer blanket pricing across the EU, making comparisons challenging. (Additionally, Pollard's comparative example cited UK pricing -- a country that's not even an EU Member State.)

Additionally, in the case of Spotify and Netflix, both are services that stream professional licensed content, making them a very poor comparison with Meta's product given the adtech giant freely obtains content from users of Facebook and Instagram (it does not need to pay a licensing fee to users -- but, hey, maybe it should?).

Even YouTube Premium provides paying customers with access to licensed content since it bundles YouTube Music.

Pollard also included the social network Reddit in this list. However its ad-free Premium offer (which is priced at US$5.99pm) appears to be roughly half the cost of Meta's web-based monthly subscription fee; and considerably more than its mobile pricing (Meta's fees of €9.99pm/€12.99pm shake out to ~US$10.94/US$14.20). So it perhaps stands as a better example of the adtech giant inflating the fee it's charging EU Facebook and Instagram users to obtain ad-free versions of its products.

Artificially high pricing suggests these are products Meta doesn't actually want anyone in the EU to pay for. Rather they are designed to force users of its mainstream social networks to keep letting it track and profile their online activity -- so it can keep raking in billions from its advertiser customers.