This is bad news for Meta’s ad-free subscription. The program was initially launched in the European Union in November, and the entire purpose for why it was offered may be in jeopardy.
Background on the Subscriptions
When Meta first introduced an ad-free subscription option, they made it clear that this was to satisfy regulators in the European Union who challenged Meta’s use of data collection for ad targeting.
Meta said that this option would give users in those countries options:
1. Use Facebook and Instagram for free and allow your data to be used for ad targeting.
OR
2. Pay a monthly subscription fee to use the apps without ads, and your data won’t be used for targeting.
This screenshot comes straight from Meta…
I considered it odd at the time (and it seems even more so now) that Meta didn’t seem to get this cleared with regulators before offering the option. Instead, it appeared to be something that their own legal counsel said should suffice.
EU Commission Ruling
The EU Commission recently ruled that this approach fails to comply with the Digital Markets Act (DMA). In other words, an ad-free subscription was a complete waste of time.
Meta doesn’t make more money from these subscriptions since it mostly replaces the money that would have been earned from advertising. In 2023, the average value of a user in Europe was $6.30 per month (below is by quarter). The subscription price, after a cut, is now very close to that value.
And long-term, removing paying customers from the targeting pool won’t be good for advertising performance.
It’ll be interesting to see what happens next. Will Meta continue to push a paid ad-free option if it doesn’t solve this issue in the EU? And what will they do next to satisfy regulators?
