Meta, the parent company of Facebook, Instagram and WhatsApp is set to introduce a subscription service across Europe, aiming to bypass ad revenue by charging users a monthly fee. EU citizens will soon have the option to pay $14 per month for Instagram, while a combined Facebook and Instagram subscription on desktop will cost $17. This new move is a response to growing scrutiny from EU regulators, who are seeking ways to curtail tech giants’ reliance on user data for free and to shake up their dominant profit models. The concept isn’t new, with social media platforms increasingly exploring paid subscription models as traditional advertising-based revenues face pressure from privacy regulations and evolving user preferences.
Chinese app TikTok is currently testing an ad-free subscription service in a single market. Snapchat and Twitter, under the name X, have long offered optional paid subscriptions, granting paying users access to unique features and a reduced ad load. In a bid to battle rampant bot activity, X’s owner, Elon Musk, recently floated the idea of a nominal monthly fee for all app users. Meta’s changes are expected to roll out in the coming weeks, following a Luxembourg court decision earlier this year that found Facebook couldn’t justify using personal data for ad targeting without user consent and encouraged exploring subscription models. Meta is actively engaging with European regulators to align with this requirement.
Under the new plans, Meta will provide an ad-free Instagram and Facebook for a fee, while users who accept personalized ads based on their data will continue to access a free version. This endeavour to monetize its services without breaching privacy laws has raised questions about the monetization of fundamental rights. Privacy activist Max Schrems challenged the concept, suggesting that making fundamental rights available only to those who can afford them is a significant departure. He asserted that it sets a worrying precedent and could lead to a tiered access system for essential rights. Nevertheless, Meta sees the subscription model as a viable way to navigate increasingly stringent data regulations, although the platform has yet to offer specific details regarding the launch.
The European Union has consistently implemented legislation to restrict how tech giants handle user data. The forthcoming Digital Markets Act, set to take effect in March, imposes new obligations on firms to share data with competitors to promote fair competition. In addition, the Data Governance Act encourages data sharing across companies and sectors, even when not primarily targeted at large online platforms. Despite the growing pressure and challenges, Meta reported robust revenues, with advertising generating $31.5 billion of its $32 billion in Q2 2023, and the EU providing a significant portion of the revenue at $7.2 billion. Tech firms face increasing scrutiny and potential financial penalties for privacy violations. Facebook, a subsidiary of Meta, was fined €1.2 billion in May for violating data transfer privacy laws, while TikTok incurred a €345 million fine last month for mishandling the data of children and teenagers.
Meta has insisted on the value of free services supported by personalized ads, alluding to a commitment to comply with evolving regulatory demands. Nevertheless, it remains to be seen how successful the subscription model will be in luring users away from the current ad-based services on Facebook and Instagram.