The tech giant launched the no-ads subscription service for Facebook and Instagram in Europe last November, saying users who consent to be tracked get a free service which is funded by advertising revenues. Or they could pay for an ad-free service.
The European Commission, which acts as the EU competition enforcer, said the binary choice breaches the bloc's Digital Markets Act (DMA) which seeks to rein in the power of Big Tech, as it sent its preliminary finding to Meta.
It said the binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalised but equivalent version of Meta's social networks.
"We want to empower citizens to be able to take control over their own data and choose a less personalised ads experience," EU antitrust chief Margrethe Vestager said in a statement.
Meta said its model complied with a ruling from Europe's top court.
"Subscription for no ads follows the direction of the highest court in Europe and complies with the DMA. We look forward to further constructive dialogue with the European Commission to bring this investigation to a close," a Meta spokesperson said.
Meta can tweak its advertising model to stave off a fine of as much as 10% of its global annual turnover if found guilty of DMA breaches. The Commission has until March next year to wrap up its investigation.
Privacy activists and privacy watchdogs have also taken issue with Meta's advertising model.
Reuters was the first to report that the EU competition enforcer would charge Meta with non-compliance under the Digital Markets Act.
The charge against Meta came a week after the EU watchdog issued its first DMA charge against Apple (AAPL.O) for not complying with the new rule.
