In response to growing concerns from privacy and antitrust regulators, Meta Platforms has announced a significant reduction in its monthly subscription fee for Facebook and Instagram.
Revenue of Meta Platforms grew 16 percent to $134.90 billion in 2023 from $116.60 billion in 2022. Monthly active users on Meta’s apps reached 3.98 billion, up 6 percent from 2022. Meta is forecasting Q1 2024 revenue of $34.5 billion to $37 billion. Meta does not reveal its revenue from subscriptions.
The decision of Meta Platforms to cut the subscription fee into half follows immense pressure from privacy activists and consumer groups, particularly concerning Meta’s no-ads subscription service introduced in Europe last November. Critics argue that the service, which requires users to pay a fee for enhanced privacy, is contradictory to the platform’s ethos.
Meta introduced the subscription service in compliance with the Digital Markets Act (DMA), which limits the social media platform’s ability to personalize ads without explicit user consent, impacting its primary revenue stream. The reduced fee model is intended to navigate the complex landscape of EU privacy laws and the DMA.
During a European Commission hearing, Meta’s lawyer, Tim Lamb, explained the rationale behind the fee reduction, emphasizing the company’s commitment to finding a balance between regulatory demands and user expectations. Lamb stated, “That is by far the lowest end of the range that any reasonable person should be paying for services of these quality, And I think that is a serious offer.”
The ongoing hearing aims to provide Meta’s users and stakeholders with clarity on the platform’s compliance with the DMA. Meta has already presented the reduced fee offer to regulators earlier this year and is currently engaging in discussions with data protection authorities, notably the Irish watchdog, to address concerns.
Under the revised subscription model, users who consent to tracking will continue to access a free service, funded by advertising revenues. However, companies risk substantial fines, up to 10 percent of their annual global turnover, for breaching DMA regulations.
Meta’s decision to reduce subscription fees for its popular social media platforms underscores its efforts to navigate regulatory challenges while maintaining user trust and compliance with evolving privacy laws.