In a setback for Meta Platforms (NASDAQ:META), the EU antitrust regulator has charged the social media giant with violating the Digital Markets Act (DMA), similar to a recent case against Apple (NASDAQ:AAPL).
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EU Regulators Concerns: Meta’s “Pay or Consent” Model
The regulators in the EU are concerned about Meta’s “pay or consent” model. Last year, META launched the no-ads subscription service for Facebook and Instagram in Europe. Users could either consent to data collection to use Facebook or Instagram for free, or pay for these apps to avoid data collection.
However, EU regulators believe that this model offers consumers a “false alternative,” potentially forcing consumers to consent to data tracking due to the financial barrier.
Meta in Crosshairs of the EU’s Digital Markets Act (DMA)
The regulators’ concerns arise from the Digital Markets Act (DMA) that came into effect earlier this year and seeks to rein in the power of “Big Tech” firms. According to the DMA, tech giants must get user consent “when they intend to combine or cross-use their personal data across different core platform services.”
The EU has stated that users who do not consent to data collection must still get access to a similar service that uses less of their data for personalized ads.
On the other hand, Meta has argued that its subscription model complies with the law. If the company is found guilty, it could face fines up to 10% of its global turnover, or 20% for repeat offenses. The EU’s preliminary investigation must be finalized within a year from the start of its investigation in March.
Is META a Buy, Hold, or Sell?
Analysts remain bullish about META stock, with a Strong Buy consensus rating based on 37 Buys, three Holds, and two Sells. Over the past year, META has surged by more than 70%, and the average META price target of $526.37 implies an upside potential of 4.4% from current levels.
