The EU accused Facebook owner Meta on Monday of breaching the bloc's digital rules, paving the way for potential fines worth billions of euros.
The charges against the US tech titan follow a finding last week against Apple that marked the first time Brussels had levelled formal accusations under the EU's Digital Markets Act (DMA).
The latest case focuses on Meta's new ad-free subscription model for Facebook and Instagram, which has sparked multiple complaints over privacy concerns.
Meta's "pay or consent" system means users have to pay to avoid data collection, or agree to share their data with Facebook and Instagram to keep using the platforms for free.
The European Commission said it informed Meta of its "preliminary view" that the model the company launched last year "fails to comply" with the DMA.
"This binary choice forces users to consent to the combination of their personal data and fails to provide them a less personalized but equivalent version of Meta's social networks," the EU's powerful antitrust regulator said in a statement.
The findings come after the commission kickstarted a probe into Meta in March under the DMA, which forces the world's biggest tech companies to comply with EU rules designed to give European users more choice online.
Meta insisted its model "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 now reply to the findings and avoid a fine if it changes the model to address the EU's concerns.
If the commission's view is confirmed however, it can slap fines of up to 10 percent of Meta's total global turnover under the DMA. This can rise to up to 20 percent for repeat offenders.
Meta's total revenue last year stood at around $135 billion (125 billion euros).
The EU also has the right to break up firms, but only as a last resort.
In EU's crosshairs
Under the DMA, the EU labels Meta and other companies, including Apple, as "gatekeepers" and prevents them forcing users in the bloc to consent to have access to a service or certain functionalities.
The commission said Meta's model did not allow users to "freely consent" to their data being shared between Facebook and Instagram with Meta's ads services.
"The DMA is there to give back to the users the power to decide how their data is used and ensure innovative companies can compete on equal footing with tech giants on data access," the EU's top tech enforcer, commissioner Thierry Breton, said.
The commission will adopt a decision on whether Meta's model is DMA compliant or not by late March 2025.
The EU has shown it is serious about making big online companies change their ways.
The commission told Apple last week its App Store rules were hindering developers from freely pointing consumers to alternative channels for offers.
The EU is also probing Google over similar concerns on its Google Play marketplace.
Apple and Meta are not the only companies coming under the scope of the DMA. Google parent Alphabet, Amazon, Microsoft and TikTok owner ByteDance must also comply.
Online travel giant Booking.com will need to adhere to the rules later this year.
Privacy complaints
Meta has made billions from harvesting users' data to serve up highly targeted ads. But it has faced an avalanche of complaints over its data processing in recent years.
The European data regulator in April has also said the 'pay or consent' model is at odds with the bloc's General Data Protection Regulation (GDPR), which upholds the privacy of users' information.
Ireland -- a major hub for online tech giants operating in the 27-nation bloc -- has slapped Meta with massive fines for violating the GDPR.
The latest complaint by privacy groups forced Meta last month to pause its plans to use personal data to train its artificial intelligence technology in Europe.
