To that end, Meta is sounding the alarm. They warn that European users will experience a “materially worse” service in light of a landmark regulatory ruling from the European Commission. As it currently stands, the Commission has decided that Meta is in breach of the Digital Markets Act (DMA). This announcement is a big deal given that decision. The company can start making possible changes to the core user experience sometime in the third quarter of this year. This will take place despite it appealing the ruling.
The European Commission just recently penalized Meta €200 million (£171 million) for failing to comply with the DMA. Meta needs to change how it operates in 60 days or face action for violating the new regulatory framework. If they don’t, they will incur even more fines monetarily. In direct response to that ruling, Meta introduced a new “consent or pay” model. Users are left to choose between paying Meta a monthly subscription fee to avoid intrusive ads or allow Meta to make data sharing across platforms, including Facebook and Instagram, the status quo.
Given all these changes, it appears that Meta is making a calculated public relations play to win hearts and minds in Europe. Analysts think the company is looking to build an army of passionate brand advocates among European users. This shift occurs against a backdrop of growing regulatory scrutiny. Eric Seufert, an analyst at Mobile Dev Memo, commented on this strategy, stating, “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.”
Even after these headwinds, Meta did see a 6% daily active user growth which shows that the company’s user base is as strong as ever. Matt Britzman, a senior equity analyst at Hargreaves Lansdown, noted the positive momentum: “There had been some concerns that we might see a slowdown in new users this year, but this was a very strong start and a signal to investors that Meta’s family of apps has a grip on users that’s hard to displace.”
Britzman highlighted Meta’s aggressive investments in artificial intelligence (AI), emphasizing that the company is “going full throttle on investments in AI.” This approach is smart given Meta CEO Mark Zuckerberg’s repeated insistence in recent months that the company has largely succeeded in its pivot toward AI technologies. “We’re making good progress on AI glasses and Meta AI, which now has almost 1 billion monthly actives,” Zuckerberg stated.
In brief response to the European Commission’s concerns about the DMA, Meta actually promised to make changes. “Based on feedback from the EC in connection with the DMA, we expect we will need to make some modifications to our model,” the company said.