What does Meta’s ad-free subscription model for European users mean for the future of digital advertising?

On October 30, 2023, Meta announced their decision to offer ad-free versions of Facebook and Instagram on a subscription basis to users in the European Union (EU), European Economic Area (EEA) and Switzerland.

From November 2023, users in these regions could either pay a monthly subscription fee for an ad-free experience or continue to use the platforms for free and receive personalized ads. Users who choose the free version implicitly agree to have their personal data used for tailored advertising.

We examine Meta’s ad-free subscription model, its compliance with European data privacy regulations, and what it means for users and advertisers.

Meta’s new subscription offering for Facebook and Instagram access in the EU and Switzerland has specific variations on pricing and access. The cost of this ad-free experience depends on the platform used for purchase:

• € 9.99/month on desktop/web
• € 12.99/month on iOS and Android

Additionally, until March 1, 2024, a single subscription covers all linked Facebook and Instagram accounts within a user’s Accounts Center. After this date, a charge of € 6 per month for each additional account will apply for web users, while iOS and Android users will face an € 8 monthly charge per additional account.

Meta, previously fined for multiple instances of unlawful advertising practices, has changed its approach. The company moved from using legitimate interest as the legal basis for data processing to using consent (Art. 6 GDPR). The aim is to align their advertising practices with European regulations, including the General Data Protection Regulation (GDPR) and the European Digital Markets Act (DMA).

Meta cites a July 2023 ruling from the Court of Justice of the European Union (CJEU) as the basis for its decision to charge a fee for ad-free access, claiming that it provides users with a genuine choice while complying with European regulations. The ruling stated that users must be free to decline consent for data collection without having to completely stop using the offered service. As a result, users should be given an equivalent alternative, “if necessary for an appropriate fee”, where their data is not processed.

Meta’s introduction of a subscription option, often referred to as the “PUR Model” or “pay or okay”, mirrors strategies used by many publishers in the EU. This model typically involves giving users access to content either through a subscription or by consenting to their data being processed.

Meta’s ad-free subscription model has raised concerns among privacy activists and is facing legal challenges.

The model’s compliance with the GDPR is a topic of ongoing discussion and scrutiny. Several European data protection authorities (DPAs) have weighed in on such subscription models as a way to continue advertising, as well as on related concepts like cookie walls and paywalls.

The Danish DPA Datatilsynet in February 2023 shared guidelines suggesting that companies could use a cookie wall if they also offered a reasonable alternative, which could be payment-based for users who did not wish to consent to data processing. The guidelines stated that companies can set a fee for subscription at their discretion but stressed that they must not set “an unreasonably high price for the payment alternative”.

The DPA guidelines also require companies to prove that processing data for statistical or personalization purposes is essential for offering access without payment as an alternative to the paid subscription.

Even if there have been cases before where a “pay or okay” model was deemed illegal in Germany, the German Data Protection Conference (DSK), evaluated subscription models and concluded in March 2023 that they could comply with GDPR and ePrivacy regulations, assuming all requirements for informed, specific, and voluntary consent were met.

Subscribers and non-subscribers must also have access to equivalent content, and providing granular consent must be possible if personal data is processed for multiple purposes. If granular consent is not possible, then consent cannot be considered fully informed and freely given and is thus invalid.

The Commission Nationale Informatique & Libertés (CNIL) also considered this issue in May 2022, stating that paywalls — where users must pay to access content if they refuse cookies — were not inherently prohibited since they offered an alternative to consenting to tracking technologies. Like the Danish DPA, they cautioned that the cost must not deter users from making a true choice, emphasizing the need for a “reasonable price”.

The Austrian DPA has been approached to assess whether the subscription cost is excessively high, potentially making it a questionable practice under European privacy laws.

A separate legal challenge has been filed before the Consumer Protection Cooperation Network by the BEUC, The European Consumer Organisation and 19 member states to assess whether the subscription model constitutes an “aggressive practice” and contravenes EU consumer laws.

The verdict is still out on whether Meta’s model aligns with European regulations like the GDPR and will largely depend on two factors:

1. Whether users are offered the option to consent, and, if so, whether this consent is deemed granular.
2. Whether the subscription fee is deemed reasonable so that it provides users with a real choice.

It’s a dynamic issue that’s still unfolding as European regulators assess the subscription model’s compliance with legal standards. The Usercentrics team will keep a watch on these developments and provide updates as the situation progresses.

With the announcement of the subscription model, Facebook and Instagram users have three options:

1. pay for a subscription to enjoy an ad-free experience
2. continue to use the platform(s) without paying, have their personal data processed, and be served personalized ads
3. leave the platforms altogether if they don’t want to pay or have their data processed

Users who choose to subscribe will have a distraction-free experience, enabling them to focus on connecting with others and consuming brand content that interests them.

However, we must consider the potential trade-offs of this subscription model. Users may enjoy an ad-free experience, but they now need to pay for platforms that were previously available for free and widely used — Meta reported 255 million monthly active users on Facebook and 250 million on Instagram in Europe at the end of 2022. The move to a subscription model might exclude European users who cannot afford the subscription fee.

Users who can’t or don’t want to pay a monthly subscription must decide if they want to part with their data for access to the social media platforms or stop using them, when they may have built up content and communities over a decade or more of use.

With Meta’s new subscription model, advertisers will have to adapt to significant changes in the digital advertising ecosystem.

Subscribed users pay a monthly fee for a subscription service with no ads on Facebook and Instagram, so they’ll not be targetable by advertisers. There could be a further reduction in audience size if users who are unwilling to subscribe or consent to data use leave the platforms. Experience with PUR models in other platforms tells us there’s normally not a significant decrease in user base. But if it does become considerable over time, it may impact advertisers’ reach, potentially impacting their marketing campaigns and return on ad investment.

With a portion of the audience now unreachable, the competition for the remaining ad space may intensify. This might lead to higher costs for advertisers as they vie for the attention of a smaller user base. At the same time, non-subscribed users may be less engaged (or more resistant) than paid ones, so less receptive to advertising generally.

Despite these challenges, advertisers retain the opportunity for targeted advertising with non-subscribed users who remain active on the platforms. This segment still allows for data-driven, targeted campaigns, enabling advertisers to maintain precision in their marketing efforts, even if to a narrower audience.

These changes in the advertising landscape urge advertisers to reevaluate their marketing strategies. A holistic approach to digital marketing that includes a variety of platforms and channels can help mitigate risks and strengthen overall advertising efforts. Embracing consent-based marketing strategies will also help future-proof organizations’ digital marketing efforts.

These impacts largely depend on how many users choose to subscribe, consent to access to their data, or leave the platforms. Nonetheless, advertisers will need to adapt their strategies to these changes.

The implementation of the European Digital Markets Act brings a significant shift to businesses advertising on Facebook and Instagram. The DMA mandates that Meta — which is one of the designated gatekeepers under the European regulation — must provide advertisers with more comprehensive ad performance metrics.

This requirement for greater transparency can offer advertisers a clearer view of how their ads perform among the non-subscribed audience segment on Meta’s platforms.

Increased transparency can also translate to deeper insights for advertisers. They can now access more detailed information about the reach, engagement, and overall effectiveness of their ads. This clarity is valuable in understanding how their content resonates with the audience that continues to see ads, and if perhaps shifts in strategy are needed to align with any changes in audience.

Despite a potentially slightly reduced data pool because of the subscription model, the enhanced metrics available under the DMA put advertisers in a position to develop more informed and targeted advertising approaches.

So DMA advertising rules still enable access to more detailed performance data, there’s the opportunity to shift towards a deeper analysis of ad performance and user engagement patterns. Advertisers can examine the nuances of how different audience segments interact with their ads, leading to more precise and effective campaign strategies.

This approach is not just about reaching the audience but engaging with them more meaningfully, tailoring messages that resonate and drive desired actions.

As the communication around DMA compliance continues to emerge and the scrutiny of Meta’s subscription model unfolds in front of data protection authorities, marketers need to monitor developments for potential changes in Meta’s policy and EU regulatory enforcement.

Staying informed and responsive to changes will be key to maintaining effective and compliant advertising practices within this evolving regulatory framework. Subscribe to our data privacy newsletter to receive monthly updates on this and other topics straight to your inbox.