Meta Platforms Inc (NASDAQ: META) has announced a significant reduction in the subscription fee for its ad-free Facebook and Instagram services in Europe, lowering the monthly cost to 5.99 euros from the initial 9.99 euros.
This decision, revealed by a senior executive at Meta, aims to address the growing concerns of privacy and antitrust regulators.
The introduction of the no-ads subscription service in Europe last November faced backlash from privacy activists and consumer groups, who criticized the company for making users pay to protect their privacy, Reuters reports.
The subscription model came as a response to the Digital Markets Act (DMA), which limits Meta's ability to personalize ads without user consent, impacting its primary source of income.
The company asserts that the new pricing strategy is an attempt to find a middle ground amidst the demands of EU privacy laws and the DMA's stipulations.
During a European Commission hearing, Meta lawyer Tim Lamb highlighted the company's intention to hasten the adaptation process by reducing the subscription price to 5.99 euros for a single account and offering a further discount for additional accounts at 4 euros each.
Lamb emphasized that this pricing is at the lower end of what is reasonable for the quality of services provided and represents a significant proposal to regulators.
The EU regulator has also been at loggerheads with the U.S. Big Tech companies over exploiting their influence to thwart smaller rivals and compromising user privacy.
Meta had challenged a supervisory fee set at 0.05% of its annual global net income to support European Union regulators in enforcing the new EU Digital Services Act (DSA). This legislation requires companies like Meta to intensify their content moderation efforts.
The European Commission has designated this charge for 20 prominent online platforms and two major online search engines, including Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) Google, Apple Inc (NASDAQ: AAPL), and TikTok, in addition to Meta.
Google and Apple have already succumbed to the EU's demands. Google introduced a new search page layout for European users, offering new browser and search choice screens during setup, and removed Google Flights data from search results pages for European flight-related queries. Apple introduced multiple changes to its App Store model for the EU.
META stock gained over 147% last year. Investors can gain exposure to the stock via Global X Social Media ETF (NASDAQ: SOCL) and Invesco S&P 500 Momentum ETF (NASDAQ: SPMO).
Price Action: META shares are trading lower by 0.74% at $493.42 on the last check Tuesday.