Meta, the parent company of Instagram and Facebook, is reportedly considering offering users the option to avoid ads by subscribing to a paid service, according to the New York Times. While this subscription-based model is on the table, Meta intends to keep its sites and apps accessible for free. The exact pricing details remain undisclosed at this stage.
This potential shift towards paid subscriptions is a response to heightened regulations governing how Meta collects and utilizes user data. It signals a forthcoming divergence in the digital experiences of users in Europe and the USA. By introducing this option, Meta aims to navigate the scrutiny of EU regulators. In July, the company was prohibited from merging data across its platforms, including WhatsApp, Instagram, and Facebook, and was slapped with a 390 million euro fine for compelling users to accept personalized ads as a condition of using Facebook services.
Meta has faced a series of fines due to mishandling user data, including a 1.2 billion euro for not complying with a previous court ruling by transferring users’ data to the US, and a 225 million euro fine for violations related to WhatsApp.
Consequently, Meta has encountered regulatory challenges in the European market, refraining from releasing its latest app, Threads, in European countries. The company believes that offering subscription choices might alleviate regulatory concerns, even though it could potentially prove unpopular.
Currently valued at $761.10 billion, with a peak valuation of $1.065 trillion in September 2021, Meta remains financially robust, capable of absorbing potential losses should few users opt for the new subscription service.
It’s noteworthy that Europe represents Meta’s second most profitable market after North America. In April, CFO Susan Li disclosed that advertising in the European Union accounted for 10% of the company’s $117 billion in annual revenue. This underscores Meta’s significant financial motivation to address concerns raised by European regulators.
Recently, Meta rolled out new features to conform with the impending EU Digital Services Act (DSA). The features introduced expanded control and transparency rules for Facebook and Instagram users from Europe.