U.S. tech giant Meta Platforms (META) is standing up to Europe by refusing to make any changes to its advertising model, despite the threat of being slapped with daily fines by regulators.
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Digital Compliance
According to a Reuters report, Meta is believed to very “unlikely” to offer up any alterations to its pay-or-consent model despite European pleas.
Under the model, EU users of Facebook and Instagram have a choice between consenting to personal data combination for personalized advertising or paying a monthly subscription for an ad-free service.
Earlier this year, the Commission found that this model is not compliant with its Digital Markets Act, as it did not give users the required specific choice to opt for a service that uses less of their personal data.
As such, Meta, run by Mark Zuckerberg, was fined €200 million ($234 million) in April by the EU and warned that it would face daily fines if it did not make changes.
Daily fines for not complying with the DMA can be as much as 5% of a company’s average daily worldwide turnover.
It is why legal and regulatory risk is such a key challenge for U.S. tech firms such as Meta.
Closed for Business
The Reuters report states that Meta will not propose additional changes unless circumstances change. This stance will likely result in new EU antitrust charges in the coming weeks.
Meta has already blasted the EU and its Digital Markets Act by claiming that its crackdown means that Europe is “closed for business.”
It has also raised concerns about the EU’s new AI Act, which has outlined a set of “high-risk” uses, such as biometrics and facial recognition, or AI used in domains like education and employment. App developers will have to register their systems and meet risk and quality management obligations to gain EU access. Violations could draw fines of up to 35 million euros ($41 million), or 7% of a company’s global revenue.
Is META a Good Stock to Buy Now?
On TipRanks, META has a Strong Buy consensus based on 42 Buy and 4 Hold ratings. Its highest price target is $918. META stock’s consensus price target is $735.28 implying a 2.73% upside.
