Meta Faces €200 Million Fine, Daily Penalties Loom Over EU Compliance Issues

Meta is facing significant regulatory pressure from the European Commission, which has warned that the company could be subject to daily fines starting June 27 if its changes to the pay-or-consent system do not meet compliance demands. This warning follows a €200 million fine imposed two months ago for violations of the Digital Markets Act (DMA), a law designed to curb the power of dominant tech platforms and prevent them from excluding competitors.

The Commission, which oversees competition issues across the EU, stated that the updated model Meta introduced in November 2023 violated the DMA between then and November 2024. This system allowed users on Facebook and Instagram to either pay for an ad-free version or use the free version while agreeing to be tracked for advertising purposes. Meta has since adjusted the model to reduce the use of personal data, but regulators remain unconvinced that these changes are sufficient.

A spokesperson for the Commission noted that the updates made so far are minor and still under review. “The Commission cannot confirm at this stage if these are sufficient to comply with the main parameters of compliance outlined in its non-compliance Decision,” the spokesperson said. They added that if Meta does not comply by next summer, daily fines could begin, totaling up to 5% of Meta’s global daily turnover.

Meta has defended its model, asserting that offering users a choice between an ad-supported version and a subscription version is a standard business practice across Europe. In a statement, the company said, “A user choice between a subscription for no ads service or a free ad-supported service remains a legitimate business model for every company in Europe, except Meta.” Meta also accused the Commission of unfair treatment, claiming that the rules were being changed midway through negotiations and that it was being singled out. “We are confident that the range of choices we offer people in the EU doesn’t just comply with what the EU’s rules require, it goes well beyond them,” Meta added.

The Commission strongly refuted these accusations, insisting that the DMA is being applied equally to all large platforms operating in the EU, regardless of their origin. “We have always enforced and will continue to enforce our laws fairly and without discrimination towards all companies operating in the EU, in full compliance with global rules,” the spokesperson said.

While navigating regulatory challenges in Europe, Meta is also investing heavily in artificial intelligence talent in the US. The company recently hired Trapit Bansal, a prominent figure in the AI world who left OpenAI. Bansal joined Meta’s AI superintelligence team, which is developing advanced reasoning models that could compete with top systems like OpenAI’s o3 and DeepSeek’s R1.

Bansal’s LinkedIn profile confirms his departure from OpenAI in June. He had been with the company since 2022 and played a key role in launching its reinforcement learning efforts alongside Ilya Sutskever. Bansal is credited as a key contributor to OpenAI’s early reasoning model, known as o1. An OpenAI spokesperson confirmed Bansal’s departure.

At Meta, Bansal joins a growing team that includes notable figures like Alexandr Wang, the former CEO of Scale AI. The company is reportedly working on a next-generation reasoning model and is assembling a powerhouse team to achieve this goal. Bansal will work alongside other recent Meta recruits, including Lucas Beyer, Alexander Kolesnikov, and Xiaohua Zhai, all of whom recently left OpenAI. They will collaborate with Jack Rae, who previously worked at Google DeepMind, and Johan Schalkwyk, who led machine learning at the AI startup Sesame.

Meta has been offering significant compensation packages to attract top AI researchers. While the exact terms of Bansal’s offer are not clear, it was substantial enough to persuade him to leave OpenAI. The company currently does not have a public reasoning model, but with this team, it is clearly aiming to develop one that can compete with industry leaders.