Tech
EU Regulators Accuse Meta of Antitrust Violations Over New Ad-Supported Service
Meta, the parent company of Facebook, faced allegations from EU regulators on Monday for failing to comply with the bloc’s landmark antitrust rules concerning its recently introduced ad-supported social networking service. The European Commission criticized Meta’s subscription model, labelling it a “pay or consent” scheme. This model forces users to either pay to use Meta’s platforms without ads or consent to their data being processed for personalized advertising. This ad-supported subscription service was introduced for Facebook and Instagram in Europe last year.
EU Commission’s Preliminary Findings
The Commission’s preliminary view suggests that this binary choice compels users to agree to the combination of their personal data, thereby failing to provide a less personalized but equivalent version of Meta’s social networks. In a statement on Monday, the regulators emphasized that users should have access to a service that utilizes less of their personal data for ad personalization.
Meta’s Response
A Meta spokesperson responded to the allegations by stating that the company’s ad-supported subscription model adheres to the directives of the highest court in Europe and complies with the Digital Markets Act (DMA). “We look forward to further constructive dialogue with the European Commission to bring this investigation to a close,” the spokesperson added. Meta introduced this new model following a ruling from the European Court of Justice last year, which allowed companies to offer an alternative version of their service that does not rely on data collection for ads.
Commission’s Critique
Despite Meta’s justification, the Commission found two key issues with Meta’s ad-supported offering. First, it doesn’t allow users to choose a service that uses less personal data but is still equivalent to the personalized ads-based service. Regulators asserted that users should be able to access an equivalent service with reduced data usage for ad personalization.
Digital Markets Act (DMA) Enforcement
The DMA, enforceable since March this year, aims to curb anti-competitive practices by large digital companies and mandate them to open up some of their services to rivals. Companies found in breach of the DMA could face substantial fines, potentially up to 10% of their global annual revenue, and for repeated breaches, this figure could rise to 20%. For Meta, a breach of the DMA could result in a penalty as high as $13.4 billion, based on the company’s 2023 annual earnings.
Next Steps for Meta
Following the receipt of the EU’s preliminary findings, Meta has the opportunity to defend itself in writing. The Commission’s investigation, launched in March alongside two other probes into tech giants Apple and Alphabet, will conclude within 12 months from the start of the proceedings.
Meta’s compliance with the EU’s antitrust rules remains under scrutiny, as the company navigates these regulatory challenges while attempting to align its business practices with the DMA’s requirements.
OpenAI’s Chief Technology Officer, Mira Murati, has announced her departure from the company after six and a half years. In a memo shared on X, Murati expressed that she had made the “difficult decision” to step away from OpenAI, citing her desire for personal exploration and reflection.
“There’s never an ideal time to step away from a place one cherishes, yet this moment feels right,” Murati wrote, emphasizing her commitment to ensuring a smooth transition for the company during this critical time.
Her exit follows other high-profile departures from the company, including co-founder Ilya Sutskever and former safety leader Jan Leike in May, as well as co-founder John Schulman, who left last month to join rival company Anthropic.
Murati’s departure comes at a time when OpenAI is pursuing a new funding round, potentially valuing the company at over $150 billion, with significant investments anticipated from major players like Thrive Capital, Microsoft, and Nvidia. OpenAI, the company behind ChatGPT, has seen rapid growth since 2022 but has also faced internal controversies and employee turnover, sparking concerns about its ability to scale safely.
Murati became a public figure when she was appointed interim CEO last November after the abrupt ousting of CEO Sam Altman. Despite her departure, she remains focused on supporting OpenAI’s momentum in the coming months.
During a congressional hearing, CrowdStrike executive Adam Meyers issued a formal apology for the massive IT outage in July, which affected millions of computers globally. In his opening remarks, Meyers expressed deep regret, stating, “On behalf of everyone at CrowdStrike, I want to apologize. We are deeply sorry this happened and are determined to prevent it from happening again.”
Meyers assured lawmakers that the company is committed to learning from the incident and making significant improvements. This includes enhancing testing and checks on updates, as well as altering how future updates are issued to avoid similar disruptions.
Caroline Ellison, the former CEO of Alameda Research and key witness in the criminal case against FTX founder Sam Bankman-Fried, faces sentencing this Tuesday. Despite her involvement in the massive fraud that led to FTX’s collapse, Ellison may avoid significant jail time due to her cooperation with federal authorities.
Ellison admitted to defrauding investors and misappropriating billions of dollars from FTX customers, redirecting funds to Alameda’s speculative trading and debt repayment. Both Ellison and Bankman-Fried face the same serious charges, which carry a potential maximum sentence of 110 years. However, her cooperation with prosecutors has been deemed “extraordinary,” leading the federal Probation Department to recommend “time served” with three years of supervised release.
Her testimony was crucial in portraying Bankman-Fried’s role in the collapse, particularly due to their close personal relationship. This unique insight into his operations helped strengthen the government’s case. While Ellison was involved in fraudulent activities, legal experts believe her lesser control compared to Bankman-Fried will likely result in a lighter sentence, potentially no more than 18 months in prison.
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