BRUSSELS—The European Union is charging Meta Platforms with breaching its new digital-competition law by giving Facebook and Instagram users a choice of either paying a subscription fee or allowing the company to use their data for targeted advertising.
The social-media company introduced the so-called pay or consent model for European users last year as part of its plan to comply with the EU’s Digital Markets Act. On Monday, the European Commission, the EU’s executive body, said that approach didn’t work.
“This binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta’s social networks,” the commission said.
If EU regulators determine Meta broke its rules, the company could face a fine of up to 10% of its worldwide revenue.
Meta said its plan follows the direction it received in a ruling from Europe’s top court last year and complies with the EU’s rules. “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” a spokesman said.
Monday’s move makes Meta the second company to be hit by charges under the EU’s Digital Markets Act, a sweeping law that sets out new rules for some of the world’s biggest tech companies and aims to make it easier for regulators to quickly address allegedly anticompetitive behavior.
Last week, EU regulators alleged that Apple was failing to comply with the law by preventing app developers from freely directing customers to alternative ways to make purchases.
On Monday, the commission said Meta’s “pay or consent” approach doesn’t allow users to choose an option that uses less personal data but is otherwise equivalent to its regular services. It also doesn’t allow users to freely consent to the combination of their personal data, it said.
Meta last year unveiled a plan to allow European users to pay a monthly subscription fee for an ad-free version of the platform. Users who don’t want to pay the fee must consent to having their personal data used for targeted advertising if they want to continue to access the service.
The charges, which the EU refers to as preliminary findings, don’t necessarily mean the company will ultimately be found to have broken the rules. Meta will have an opportunity to examine regulators’ findings and to respond to them, the commission said.
The commission said it would conclude its investigation by late March of next year.
Write to Kim Mackrael at kim.mackrael@wsj.com