Have you ever been told, “If you are not paying for it, you’re not the customer; you’re the product being sold?” If you are a social media user, you might have read it somewhere. Social media platforms are reasserting the statement nowadays. The latest meta update says that they will soon charge EU users a $14 monthly subscription fee for Ad-free Instagram and Facebook access, unless they allow personal data use for targeted ads. The Wall Street Journal reported that the subscription fee would be $17 for the desktop versions.
A Meta spokesperson told the Wall Street Journal, “Even though the company wants to provide free service supported by personalized ads, it is exploring other avenues to comply with evolving regulatory requirements.” According to the report, Meta has informed European regulators about the ad-free scheme, called subscription no ads (SNA), over the next few months.
What Triggered Meta?
Privacy Laws vs Ad-Free Instagram and Facebook
- The companies are under strict supervision when it comes to the use of private data. Under the GDPR guidelines passed by the EU parliament, there are certain restrictions for a company to transfer personal data outside EU jurisdictions. What happened then? Meta did not give much attention to it and continued violating the guidelines by sending users personal data abroad for processing. The rest is history. No wonder the Threads App was not released in the EU.
Penalty
- The social media company was fined 1.2 billion euros earlier this year by Ireland’s Data Privacy Commissioner for transferring data from the EU to the USA. Meta argued that there is a legal contract (terms and conditions) followed when an EU user signs up with Meta apps and platforms. But it backfired. The data privacy verdict said that it cannot use the so-called “contract” legal basis to send users ads based on their online activity.
Falling Ads Revenue
- Delivering ads requires access to personal data. Otherwise, it will make the ads ineffective, and advertisers will lose money targeting non-potential customers. Ever since the new privacy regime was put in place, Meta has been struggling with advertisement revenues. European advertisers make up between 21% and 25% of Meta’s global ad revenue, and the privacy laws ban personalized ads. So Meta had to reevaluate its priorities to place targeted ads amid privacy concerns.
Alternate income Source
Nothing in the world is free, and you cannot expect anyone to do you a favor in this competitive world. How can Meta survive in a place where there is no source of revenue? To implement Ad-free Instagram and Facebook, there should be some alternative revenue model for the services to sustain. Meta’s new plan would require users to either agree to allow personalized ads or not to use their service at all. You can either take or leave it. In any of these cases, the marketing profession and career will be on the losing end.
Meta said that $14 is a “reasonable fee” and on par with their lost advertising revenue( $17.88 per user) under the new EU regulations. There is no way out in Europe other than charging regular customers for their services.
Fair Warning to Authorities
- Regulators have questioned the price plan. Considering the recession in EU, this would create a social divide among the number of people seeking information. Even though Meta said the fee was reasonable, not every European could afford it. Remember, Europe is not only Germany and France. So there will be protests in Europe for freedom of speech and information and for using social media.
Following the Trend
- A subscription fee for Meta’s services is a major turnaround. Meta has insisted that core services will remain free and supported by ads. At a 2018 conference, Zuckerberg said, “You don’t need thousands of dollars to connect with people who use our services”.
- Subscription services put Meta in line with other services like Spotify, which also charge for ad-free experiences. Meta has finally understood that it is time to change with a change in market dynamics. It is finally following the YouTube lead by charging for ad-free experiences. X( formerly Twitter) has already introduced premium features for paid customers. So, whoever delivers some service must require some financial support to continue delivering it.
Wrapping Up
Almost all social media platforms are under constant scrutiny in several countries over alleged privacy and regulatory violations. If more and more countries introduce stringent personal laws, it will be a headache for all social media platforms.
Meta said that it will follow all the safety nets by asking users for their consent before allowing businesses to target advertising. But it is unlikely that EU authorities will approve it, like in the past. Data localization and processing are not practically possible in the EU, considering its cost and high labor charges.
If the trend continues, the next culprit on the list will be Google. Google targets ads based on users search histories, which is more concerning than meta ads. So if Google joins hands with Meta, there will be a digital war between corporations and nations. So will these corporations lock horns with the regulators? We have to wait and watch.