By Scott Nover
There’s a truism in tech that goes something like “If you’re not paying for the product, you are the product.” It’s a tired phrase, but until advertising ceases to be the economic engine of the internet, we’re stuck with it.
Digital ads have made technology companies like Alphabet, ByteDance, and Meta rich, enabling them to offer services like social networking, video streaming, and search engines completely free for users.
Recently, however, the EU has gone to war with Meta—the parent company of Facebook, Instagram, and WhatsApp—over how exactly it profits off its users.
In the last year alone, various European bodies halted Meta from combining user data collected by its various services, fining it $1.3 billion for sending European user data across the Atlantic, and another $414 million for making users accept personalized ads in the company’s terms of service.
In response to Europe’s meddling in its primary source of revenue, Meta has reportedly floated a brand-new option for consumers, allowing them to simply pay for access to Facebook and Instagram.
Sounds reasonable, right? Well, not exactly. Under the proposal offered to European regulators, Meta would reportedly charge €13 per month ($13.76) for users to access an ad-free version of Facebook and Instagram on their mobile devices.
If your first reaction isn’t, “Who in their right mind hates ads so much they would pay $165 a year for this?”—then this might be the product for you!
A paid version of Facebook could, in fact, improve consumer welfare by giving people more choice and a reasonable way to opt out of being treated as a product, but Meta’s proposal isn’t a serious one. While competitors are making sincere attempts to diversify revenue and give users more options, Meta’s EU proposal is little more than a flipped bird to overseas regulators.
Advertising has fueled the internet economy for decades—and that’s a good thing. Advertising subsidizes media and web services so everyone can have equal access regardless of their ability to pay. That’s allowed Meta to sign up about half of the world’s population across its apps.
But, in recent years, one-time ad-dependent companies have started offering paid versions of their products too. On Snapchat, a $3.99 a month Snapchat+ subscription gets you—among other things—a suite of tools to customize your app, additional analytics, as well as early access to new features. Five million people have signed up since the service launched last year.
Meanwhile, the messaging app Discord offers a two-tiered Nitro subscription: A $2.99 per month tier gets users custom emoji, animated replies, and the ability to upload bigger files; and a $9.99 monthly plan offers perks such as high-definition streaming and customizable profiles.
Of course, Elon Musk has made a subscription service the hallmark of his tenure at X (formerly Twitter). X Premium (née Twitter Blue) launched in the pre-Musk days with the option to unsend recent tweets, a “top articles” section where users can see what news their connections are discussing, and a long-requested edit button. Musk has both expanded that offering, letting paying users post longer tweets and longer videos while getting half the number of ads. But he’s also complicated the service, lumping in the very-important verification system and selling blue checkmarks to anyone who will cough up $8 a month. On Tuesday, Fortune reported that Musk is even considering charging all new users $1 per year for the very privilege of tweeting.
Putting aside the Musk headache, each of these tech companies has offered users a way to pay up for want-to-have, not need-to-have features. But, Meta’s ad-free version more closely resembles a streaming TV service like Hulu, which offers a $7.99 a month tier with ads and a $17.99 per month tier without ads. Are Facebook ads as pesky as ones that interrupt your viewing of The Bear or Only Murders in the Building? Almost certainly not.
The plainest dissonance comes when comparing Meta’s proposed plan with recent reports that TikTok is testing out an ad-free experience for only $4.99 a month, a price point that’s much more attached to reality than whatever Meta is offering.
Meta almost certainly doesn’t want users to pay.
In the most recent fiscal quarter, Meta brought in $32 billion in total revenue. $31.5 billion, or 98%, was from advertising. If you assume that every one of the 3 billion monthly users sees ads, that would mean Meta makes about $10.50 per user on ads—per quarter. So that’d be $42 per user each year. And even that figure may be low since some people may solely use WhatsApp, which is still ad-free.
Additionally, offering an ad-free Facebook and Instagram would hurt Meta’s ability to fully capitalize on its large and diverse user base—devaluing its main offering.
Meta, in other words, has no real incentive to offer an ad-free experience unless it’s going to be a huge moneymaker and won’t bring down its ad business.
It’s up to European regulators to recognize the obvious—that this plan is a bluff, a challenge, and an unserious proposition that serves more to waste everyone’s time than give consumers better choices about how they scroll and how their personal data is used.
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