Changing Tactics: Meta may remove ads from Insta, FB because of EU’s DSA and ad transparency laws

Meta, the tech giant encompassing various platforms, has often displayed a predictable response to challenges, particularly when it involves new regulations aimed at enhancing transparency in its targeted advertising business.

However, Meta’s compliance tends to come with its own set of conditions. The company behind Facebook and Instagram is reportedly contemplating a significant departure from its traditional business model, considering the introduction of a subscription option for users in the European Union.

Meta completely changes its course in the EU
According to The New York Times, citing information from three anonymous insiders familiar with Meta’s plans, the company is exploring the possibility of offering a subscription model to EU users.

In essence, this subscription would allow users to pay for an ad-free experience, while Facebook and Instagram would continue to provide a free version supported by advertisements. Details such as the subscription cost and additional features that might accompany it remain undisclosed at this time.

Nevertheless, this potential move signifies a major departure for Meta, which has long relied on the “users-as-product” model as a cornerstone of its business strategy over the past decade.

The reported move by Meta to introduce a subscription option for European Union users is seen as an effort to navigate the complexities arising from the EU’s Digital Services Act. This legislation imposes greater transparency requirements on major tech companies, particularly those with extensive platforms, regarding their practices related to targeted advertising and content moderation. Although the law passed through the European Parliament last year, it has yet to come into full effect, but some of its provisions are already being enforced by the EU.

Meta’s history with EU laws
Meta has already faced challenges under the EU’s tightening regulatory framework for advertising. In Germany, antitrust regulators prevented Meta from aggregating user data across its major platforms, including Facebook, Instagram, WhatsApp, and other websites.

Meta’s ability to attract advertisers is heavily reliant on this collected user data. Furthermore, in May, the EU imposed a $1.3 billion fine on Meta for transferring EU data to the United States.

Pay-to-remove-ads model is becoming more common
It’s worth noting that there are only a few social media networks that offer users the option to pay in exchange for an ad-free experience. Twitter, with Elon Musk’s involvement, introduced a paid verification service for $8, promising subscribers to see fewer ads than non-subscribers. Meta already provides a paid verification service, priced at $12 on the web and $15 on iOS, offering enhanced account monitoring capabilities but not extending into additional ad-related services.

Instagram has been taking steps in response to evolving regulations and user demands. Last month, the platform announced the introduction of a chronological feed for Stories and Reels in Europe, alongside a commitment to providing more transparency regarding the ranking of posts in its AI algorithms.

Additionally, Instagram recently introduced a new setting that allows users to restrict Meta its parent company, from using their posts to train its AI models. This move aligns with ongoing efforts by the European Union to encourage major tech companies to establish systems capable of recognizing and labelling AI-generated content.