Meta users in Europe may face degraded service: Here's why
What's the story
Meta, the parent company of Facebook and Instagram, has warned that it might have to compromise user experience for its European audience.
This comes after a major regulatory decision from the European Commission, the EU's main executive body.
The commission recently ruled that Meta's "consent or pay" strategy violates the Digital Markets Act (DMA), resulting in a €200 million fine on the tech giant.
Official statement
Meta's response to the regulatory decision
In its quarterly earnings report, Meta acknowledged the European Commission's feedback on the DMA and noted that it may have to modify its current model.
The company said, "Based on feedback from the EC in connection with the DMA, we expect we will need to make some modifications to our model."
It further warned that such changes could drastically alter European users' experience and hurt its business and revenue in Europe.
Business consequences
Potential impact and future implications
Meta has warned that the repercussions of these changes could be felt as early as the third quarter of this year, and may continue during its appeal against the EC's decision.
Analyst Eric Seufert suggested Meta might be trying to rally European users to support its products amid regulatory challenges.
"What they ultimately want to do is turn public opinion against this regulatory regime which will demonstrably degrade the product offerings that are available to EU residents," Seufert told BBC.
Regulatory scrutiny
EC's stance on Meta's data usage model
The European Commission has slammed Meta's consent-or-pay model, saying it doesn't let users freely consent to how their data is used.
The Commission is also reviewing another option introduced by Meta last year, which the company claims uses less personal data for targeted advertising.
After the recent ruling, Meta has been given a 60-day deadline to comply with the DMA's decision or face further fines.
Financial performance
Meta's latest quarterly earnings report
Despite the regulatory hurdles, Meta's latest quarterly earnings report beat Wall Street expectations, showing that the company continues to rake in a lot of advertising revenue.
The company also highlighted its progress on artificial intelligence (AI) tools.
"We're making good progress on AI glasses and Meta AI, which now has almost one billion monthly actives," said Meta founder and CEO Mark Zuckerberg.