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Meta challenges commission decision on digital Markets Act compliance

Commission ruling forces tech giant to offer reduced personalization service without compensation.

Luis Rijo

• 5 min read
Meta logo faces off against EU flag amid digital data streams, representing DMA compliance dispute over ads.
Meta logo faces off against EU flag amid digital data streams, representing DMA compliance dispute over ads.

Meta announced July 2 its formal appeal of the European Commission's decision regarding the company's offering in Europe under the Digital Markets Act (DMA). The Commission ruled in April that Meta's choice between an ad-free subscription and free, ad-supported service does not comply with DMA requirements, forcing the company to provide a less personalized advertising experience without payment.

According to Meta's statement, the decision ignores a July 4, 2023 judgment by the Grand Chamber of the European Court of Justice. The court declared that a dominant company can obtain valid consent by offering users a choice between subscription-based service and free, personalized ad-supported service. Meta argues this ruling directly addresses the same data processing issues the Commission now contests.

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Summary

Who: Meta Platforms Ireland and the European Commission, with involvement from European Court of Justice Grand Chamber and various national data protection authorities

What: Meta's formal appeal of the European Commission's decision requiring the company to offer less personalized advertising without compensation, challenging the Commission's interpretation of Digital Markets Act compliance

When: July 2, 2025 announcement of appeal, following April 2024 Commission decision and July 4, 2023 European Court of Justice judgment

Where: European Union, specifically affecting Meta's operations across all EU member states and European Economic Area

Why: Meta argues the Commission decision ignores established court precedent, undermines economic viability, and contradicts market economy principles while forcing degraded user experience and reduced advertiser effectiveness

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The Commission's decision mandates that Meta offer a less personalized ads service for free, disregarding commercial realities and imposing what Meta describes as "a potentially unviable business model." This requirement contradicts market economy principles where companies receive fair compensation for valuable services, according to Meta's legal team.

Meta's personalized advertising services generated €213 billion in economic activity and supported 1.44 million jobs across the EU in 2024. The company contends the Commission's demands undermine this economic value by forcing less effective advertising that reduces business outcomes for European companies.

In response to Commission pressure, Meta launched Less Personalized Ads (LPA) in November 2024. This service uses approximately 90% less data than personalized ads, creating significant consequences for user experience and advertiser returns. Early data shows LPA leads to an almost 800% increase in ads being closed for reasons including "irrelevant" or "repetitive" content.

European Small and Medium-sized Enterprises face the most significant impact from LPA implementation. These advertisers rely heavily on direct response advertising, which becomes substantially less effective under the reduced personalization model. Initial feedback indicates LPA achieves 70% fewer onsite conversions and 61% fewer offsite conversions compared to personalized advertising.

The DMA introduced new rules for "Gatekeeper" companies including Meta, requiring GDPR consent for personal data use in ad delivery under Article 5(2). These regulations specifically target large online platforms deemed gatekeepers due to their size and market influence.

Multiple national courts and data protection authorities have supported business models providing paid subscription alternatives to consent for personalized ads. France, Denmark, and Germany have all endorsed such approaches, making Meta's situation unique among European companies. The decision effectively prohibits Meta from offering both subscription-based and free ad-supported services while requiring competitors to provide only the paid alternative.

Meta initiated constructive engagement with regulators before any investigation launched, which the Commission publicly acknowledged. However, throughout 2024 and into 2025, regulatory goalposts continued shifting with inconsistent feedback often untethered from DMA text. Despite significant investment in compliance efforts, the Commission repeatedly stated it would never approve DMA compliance proposals.

Meta's 2025 DMA compliance report demonstrates what regulatory experts characterize as a more reactive approach than meaningful engagement. The company reduced its Subscription for No Ads price by 40% in November 2024 and launched Less Personalized Ads as additional options for EU users.

The Commission's decision creates uncertainty for new European market entrants by hindering traditional monetization methods. Reducing personalized advertising efficiency undermines key marketing strategies for newcomers while creating degraded user experiences. This outcome contradicts the DMA's stated goals of promoting competition and innovation.

Competition law expert Alba Ribera Martínez notes Meta's approach reflects preference for "stable and stagnant method of compliance as opposed to dynamic and moving-target-like discussions with the European Commission." The company's report directly challenges Commission interpretation of regulatory requirements beyond written rules.

Recent enforcement actions demonstrate the EU's commitment to DMA implementation, with €700 million in fines issued to tech giants for violations. Apple received €500 million and Meta €200 million for failing to comply with obligations ensuring fair competition and consumer choice.

The European Court of Justice's 2023 judgment specifically assessed Meta's advertising business model and data processing issues. The court determined that offering users choice between subscription service and free personalized ads constitutes valid consent under competition law. This precedent directly contradicts the Commission's current position regarding Meta's European offering.

Meta argues the decision runs counter to established court precedents and prevents a business model relied upon by many European companies. The company faces unique restrictions compared to competitors who can offer both subscription-based and free ad-supported services without similar constraints.

The Commission insists Meta must "demonstrate" its "entitlement to consideration" for services based on social media being "integral" to EEA citizens' daily lives. However, other potentially essential services from telecom, news media, and broadband providers operate without free service mandates.

This regulatory dispute highlights broader tensions between digital market regulation and business model viability. Meta's appeal challenges not only the specific decision but the Commission's interpretation of legitimate business practices under the DMA framework.

The case underscores questions about meaningful regulatory dialogue and compliance expectations. Meta contends the Commission's approach undermines participative regulatory discussion central to DMA goals, calling for stakeholders to demonstrate better regulatory system contribution.

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