Facebook-owned company Meta is considering launching a subscription-based version of Instagram and Facebook in Europe to comply with EU regulations. The move comes as the social media giant faces increasing pressure to adhere to European rules aimed at curbing the power of US tech companies. Meta currently generates significant profits by providing advertisers with personalized user data, but recent EU regulations and court decisions have made this business model more challenging. The proposed subscription service, which has been presented to EU regulators, would allow European users to opt out of targeted advertising by paying a monthly fee of €10 ($10.50) for a desktop version of Instagram or Facebook, or €13 ($13) for Instagram on mobile devices.
Charging users for site access in order to comply with data privacy regulations or enhance user identity verification has been a topic of discussion within the social media industry. However, this shift would mark a substantial departure from the advertising-based model that has driven the sector’s growth over the past decade. In exchange for accessing social media platforms for free, users have traditionally agreed to be tracked and receive highly personalized ads. Implementing the proposed subscription service could address multiple EU regulations, including the Digital Markets Act, which imposes certain restrictions on big tech companies operating in Europe. For instance, it prohibits tracking users on external websites without explicit consent.
The potential subscription offering aligns with a recommendation from the EU’s highest court. In a July ruling, the court stated that Meta must provide users who decline to be tracked with an ad-free alternative for an appropriate fee. This decision echoed previous judgments that highlighted the need for Meta and other US tech firms to obtain permission before collecting extensive amounts of personal data. While Meta did not directly comment on the news report, the company emphasized its belief in the value of free services supported by personalized ads and stated its commitment to exploring options that align with evolving regulatory requirements.
The financial impact of implementing a subscription-based model could be significant for Meta. In the second quarter of this year, the company reported revenues of $32 billion, with $31.5 billion attributed to advertising. Within that total, Europe accounted for $7.2 billion in advertising revenue. As Meta navigates the changing regulatory landscape, it aims to strike a balance between compliance and preserving its profitable business model. The proposed subscription service could provide a viable solution, offering European users an alternative to targeted ads while meeting EU regulations. However, it remains to be seen how users will respond to the new approach and whether other big tech companies will follow suit.
